CapitalStock,DividendsBusiness(公司金融会计)

1、C11 - 1CapitalStock,DividendsBusiness(CapitalStock,DividendsBusiness(公司金融会计公司金融会计) )C11 - 2 Characteristics of Corporations Stockholders Equity Issuing Stock Treasury Stock Transactions Stock Splits and DividendsDividend Yield on Common StockSlide # Power Note Topics31019222835 Note: To select a top

2、ic, type the slide # and press Enter.Power NotesChapter F11C11 - 34As a separate legal entity, a corporation may own and dispose of property in its own name.4The corporation ownership is divided into units called shares of stock.4The owners of the shares are called shareholders or stockholders.4Stoc

3、kholders of a corporation have a limited liability.C11 - 4Stockholders(owners of corporation stock) the basic ownership of stock with rights to vote in election of directors, share in distribution of earnings, and purchase additional shares. A class of stock with preferential rights over common stoc

4、k in payment of dividends and company liquidation.C11 - 5Board of Directors(elected by stockholders)Stockholders(owners of corporation stock)C11 - 6Officers(selected by board of directors)Board of Directors(elected by stockholders)Stockholders(owners of corporation stock)C11 - 7Employees(hired by of

5、ficers)Officers(selected by board of directors)Board of Directors(elected by stockholders)Stockholders(owners of corporation stock)C11 - 8u First step is to file an application of incorporation with the state.u Because state laws differ, corporations often organize in states with more favorable laws

6、.u More than half of the largest companies are incorporated in Delaware.u State grants a charter or articles of incorporation which formally create the corporation.u Management and board of directors prepare bylaws which are operation rules and procedures.C11 - 9Organization Costs8,500Cash8,500Amort

7、ization Expense1,700Organization Costs1,700$8,500 costs / 5 years = $1,700Jan. 5Paid organization costs of $8,500.Amortization of organization costs over 5 years.Dec. 31Cost of organizing includes legal fees, taxes and licenses, promotion costs, etc. These costs are recorded as an intangible asset.C

8、11 - 10AssetsLiabilitiesStockholdersEquityStockholders Equity = Assets LiabilitiesRepresents the stockholders share of the total assets.C11 - 11StockholdersEquityPaid-in capital:Common stock$330,000Retained earnings80,000Total$410,000C11 - 12StockholdersEquityThere are two sources of stockholders eq

9、uityPaid-in capital:Common stock$330,000Retained earnings80,000Total$410,000C11 - 13StockholdersEquityRetained earnings80,000Total$410,000There are two sources of stockholders equity1C11 - 14StockholdersEquityPaid-in capital:Common stock$330,000Total$410,000There are two sources of stockholders equi

10、ty2C11 - 15StockholdersEquityThere are two sources of stockholders equityfromstockholdersPaid-in capital:Common stock$330,000Retained earnings80,000Total$410,000from earnings12C11 - 16 The basic ownership of stock includes:1. Right to vote in election of directors and other important matters.2. Righ

11、t to share in distribution of earnings.3. Preemptive right to purchase sufficient shares of new common stock offerings to maintain an existing ownership percentage. A class of stock with preferential rights over common stock with respect to payment of dividends and assets of the corporation in liqui

12、dation.C11 - 17Preferred dividend4,0004,0004,000Common dividend$6,000$31,000$18,000Dividends per share: Preferred$ 4.00$ 4.00$ 4.00 Common$ 1.50$ 7.75$ 4.50A nonparticipating preferred stock is limited to a certain amount. Assume 1,000 shares of $4 nonparticipating preferred stock and 4,000 shares o

13、f common stock and the following: 20022003 2004 Net income$20,000$55,000$62,000Amount retained10,00020,00040,000Amount distributed$10,000$35,000$22,000C11 - 18Preferred Dividend: First year in arrears$4,000 Second year in arrears4,000 Third year current4,00012,000Common dividend$10,000Dividends per

14、share: Preferred $ 12.00 Common $ 2.50Assume 1,000 shares of $4 cumulative preferred stock and 4,000 shares of common stock. No dividends have been paid in the preceding two years.Amount distributed in 3rd year $22,000C11 - 19Cash1,500,000Preferred Stock500,000Common Stock1,000,000The stock accounts

15、 are controlling accounts. A record of each stockholders name, address, and number of shares is kept in a stockholders subsidiary ledger.Jan. 5One-half of each class is issued at par for cash.A corporation is authorized to issue 10,000 shares of preferred stock, $100 par, and 100,000 shares of commo

16、n stock, $20 par. C11 - 20Cash110,000Preferred Stock100,000Paid-In Capital in Excess10,000The $10,000 excess is recorded in a separate account because some states do not consider this to be part of legal capital and may be used for dividends.Many states do not permit issuance at a discount.Jan. 5Iss

17、ued 2,000 shares of $50 par preferred stock for $55.When stock is issued for more than its par, the stock has sold at a premium. It has sold at a discount if issued for less than its par.C11 - 21Land120,000Common Stock100,000Paid-In Capital in Excess20,000Jan. 5Acquired land (fair market value canno

18、t be determined) for 10,000 shares of $10 par common. The current market price of the stock is $12 per share.Stock issued for assets other than cash should be recorded at the fair market value of the asset or fair market value of the stock, whichever can be more clearly determined.C11 - 22Cash400,00

19、0Common Stock400,000Cash36,000Common Stock36,000Jan. 5Issuance of 10,000 shares of no-par common at $40.In most states, both preferred and common stock may be issued without a par value. Preferred stock, however, is normally assigned a par value.Jun. 15Issuance of 1,000 shares of no-par common at $3

20、6.C11 - 23A recent survey indicated that over 64% of companies reported treasury stock.is stock that:1. Has been issued as fully paid.2. Has been reacquired by the corporation.3. Has not been canceled or reissued.A commonly used method of accounting for treasury stock is the cost method.The account

21、is debited for a purchase.When sold, Treasury Stock is credited and any difference is debited or credited to an account titled .C11 - 24Treasury Stock45,000Cash45,000Cash12,000Treasury Stock9,000Paid-In CapitalTreasury Stock3,000Cash8,000Paid-In CapitalTreasury Stock1,000Treasury Stock9,000Jan. 5Pur

22、chased 1,000 shares of treasury stock at $45.Jun. 2Sold 200 shares of treasury stock at $60.Sold 200 shares of treasury stock at $40.Sep. 3C11 - 25General Ledger BalanceDateItemDebitCredit DebitCreditAccount: Treasury StockAccount No. 3801/51,000 shs. $4545,00045,0006/2200 shs. $609,00036,0009/3200

23、shs. $409,00027,000Treasury stock is booked at cost upon acquisition and sale.C11 - 26 BalanceDateItemDebitCredit DebitCreditAccount: Paid-In Capital Treasury StockAccount No. 3956/2200 shs. $603,0003,0009/3200 shs. $401,0002,000General Ledger BalanceDateItemDebitCredit DebitCreditAccount: Treasury

24、StockAccount No. 3801/51,000 shs. $4545,00045,0006/2200 shs. $609,00036,0009/3200 shs. $409,00027,000If treasury stock is sold for more than its cost, the difference is credited to Paid-In Capital Treasury Stock.C11 - 27Paid-in capital:Common stock, $25 par (20,000 shares authorized and issued) $500

25、,000Excess of issue price over par150,000From sale of treasury stock2,000 Total paid-in capital$652,000Retained earnings130,000Total$782,000Deduct treasury stock (600 shares at cost)27,000Total stockholders equity$755,000Debit balance of Treasury Stock account.C11 - 28Corporations sometimes reduce t

26、he par or stated value of their common stock by issuing a proportionate number of additional shares. This is called a stock split.An example:A corporation has 10,000 shares of $100 par common stock outstanding when a 5-for-1 stock split is declared.Before: 100,000 shares $100 par = $10,000,000After:

27、 500,000 shares $20 par = $10,000,000The total legal capital is the same. Only the number of shares and the par per share are changed. No journal entry is required.C11 - 294 Dividends are distributions of retained earnings to stockholders.4 Dividends may be paid in cash, stock, or property.4 Dividen

28、ds, even on cumulative preferred stock, are never required, but once declared become a legal liability of the corporation.4 Cash dividends are declared and paid on shares outstanding with three conditions:1. Sufficient retained earnings2. Sufficient cash3. Formal action by the board of directorsC11

29、- 30Cash Dividends42,500Cash Dividends Payable42,500 Cash Dividends Payable 42,500Cash42,500Dec. 1Declared cash dividends on preferred and common.Preferred: $2.50 x 5,000 shares = $12,500Common: $0.30 x 100,000 shares = $30,000A quarterly cash dividend is declared on 5,000 shares of $100 par 10% pre

30、ferred stock and $0.30 on the 100,000 shares of $10 par common stock.Jan. 2Paid cash dividend declared on December 1.C11 - 31Stock Dividends3,100,000Stock Dividends Distributable2,000,000Paid-In Capital in Excess of Par1,100,000 Stock Dividends Distributable2,000,000 Common Stock2,000,000Dec. 15Decl

31、ared a 100,000 (5%) stock dividend on common.Market price is $31 a share at declaration date. Stock dividends transfer pro rata shares of stock to stockholders. Assume a 5% stock dividend on common stock, $20 par, 2,000,000 shares issued.Jan. 10Issued the stock dividend declared on December 15.C11 -

32、 32Equity per share$37.80$36.00A Stockholder: Shares owned1,0001,050 Total equity$37,800$37,800 Portion of corporation owned.05%.05% Before After Common stock$40,000,000$42,000,000Excess of issue price over par9,000,00010,100,000Retained earnings26,600,00023,500,000 Total stockholders equity$75,600,000$75,600,000Number of shares outstanding2,000,0002,100,000C11 - 33Equity per share$37.80$36.00A Stockholder: Shares owned1,0001,050 Total equity$37,800$37,800 Portion of corporation owned.05%.05%Note: The total stockholders equity is exactly the sa