Investment Clubs Manual059 - 52 October 2008 2...

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Unformatted text preview: 52 October 2008 2) MEMBERS'CAPITAL ACCOUNT This form has to be updated each time members buy or sell units. A new sheet is started each month, with the members‘ names in the first column. It is helpful to list them in the same order each time. The procedure for calculating the value of a unit will be explained later when we come to the Monthly Assets Statement. Example two: Members' Capital/lawn! {Next page) It will be seen in Example two that the prices for buying and selling units are the same. This is because this club is not charging its members brokerage on buying or selling units. lfthey were, the two prices could vary. Club brokerage has already been discussed in principle and will be dealt with later from an accountancy point of view. The fourth column, Withdrawals, is only to be used when a member sells back to the club some of the units he/she owns, or in the case of a member leaving the club when he/she will be selling back all of his units. Entries under Withdrawals and Deposits on this form will correspond with entries made under the headings of Members'Wlthdrawals and Subscriptions in the Cash Account.The total of the Surplus Cash column is, in effect, a liability ofthe club and this figure will be required, along with the total Balances - Units for the completion of the Monthly Assets Statement. The top part of the example shows the first month's accounts of a new club where each of the eight founder members has paid an Initial subscription of £100. The unit value starts at 100p so they are each allocated 100 units precisely, with no surplus cash arising. At this stage a total of 800 units will have been issued and there will be £800 in the bank to support the value of loop per unit. In months two and three each member pays a £20 subscription. No investments have been bought yet so the unit value is still 100p and by the end of the month each member would own 140 units. Total units issued would be 1,120 (eight members x 140) and there would be £1,120 cash in hand. ProShare Investment Club THE MANUAL ...
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