CapitalStock,DividendsBusiness(公司金融會(huì)計(jì))ppt課件

1、Learning ObjectivesPower Notes1. Nature of a Corporation2. Stockholders Equity 3. Sources of Paid-in Capital 4. Issuing Stock 5. Treasury Stock Transactions6. Stock Splits7. Accounting for Dividends8. Financial Analysis and InterpretationChapter F11C11 Corporations: Organization, Capital Stock, Divi

2、dends 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 topic, type the slide # and press Enter.Power NotesChapter F11 Corporations: Organization,

3、 Capital Stock, DividendsCharacteristics of CorporationsAs a separate legal entity, a corporation may own and dispose of property in its own name.The corporation ownership is divided into units called shares of stock.The owners of the shares are called shareholders or stockholders.Stockholders of a

4、corporation have a limited liability.Characteristics of CorporationsStockholders(owners of corporation stock)Common Stock the basic ownership of stock with rights to vote in election of directors, share in distribution of earnings, and purchase additional shares.Preferred Stock A class of stock with

5、 preferential rights over common stock in payment of dividends and company liquidation.Classes of StockCharacteristics of CorporationsBoard of Directors(elected by stockholders)Stockholders(owners of corporation stock)Characteristics of CorporationsOfficers(selected by board of directors)Board of Di

6、rectors(elected by stockholders)Stockholders(owners of corporation stock)Characteristics of CorporationsEmployees(hired by officers)Officers(selected by board of directors)Board of Directors(elected by stockholders)Stockholders(owners of corporation stock)Forming a CorporationFirst step is to file a

7、n application of incorporation with the state.Because state laws differ, corporations often organize in states with more favorable laws.More than half of the largest companies are incorporated in Delaware.State grants a charter or articles of incorporation which formally create the corporation.Manag

8、ement and board of directors prepare bylaws which are operation rules and procedures. DateDescriptionDebitCreditForming a CorporationOrganization Costs8,500Cash8,500Amortization Expense1,700Organization Costs1,700$8,500 costs / 5 years = $1,700Jan. 5Paid organization costs of $8,500.Amortization of

9、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. Stockholders EquityAssetsLiabilitiesStockholdersEquityStockholders Equity = Assets LiabilitiesRepresents the stockholders share of

10、 the total assets. Stockholders EquityAssetsLiabilitiesStockholdersEquityStockholders Equity:Paid-in capital:Common stock$330,000Retained earnings80,000Total$410,000 Stockholders EquityAssetsLiabilitiesStockholdersEquityThere are two sources of stockholders equityStockholders Equity:Paid-in capital:

11、Common stock$330,000Retained earnings80,000Total$410,000 Stockholders EquityAssetsLiabilitiesStockholdersEquityfromstockholdersStockholders Equity:Paid-in capital:Common stock$330,000Retained earnings80,000Total$410,000There are two sources of stockholders equity1 Stockholders EquityAssetsLiabilitie

12、sStockholdersEquityStockholders Equity:Paid-in capital:Common stock$330,000Retained earnings80,000Total$410,000from earningsThere are two sources of stockholders equity2 Stockholders EquityAssetsLiabilitiesStockholdersEquityThere are two sources of stockholders equityfromstockholdersStockholders Equ

13、ity:Paid-in capital:Common stock$330,000Retained earnings80,000Total$410,000from earnings12Two Classes of StockholdersCommon Stock The basic ownership of stock includes:1. Right to vote in election of directors and other important matters.2.Right to share in distribution of earnings.3.Preemptive rig

14、ht to purchase sufficient shares of new common stock offerings to maintain an existing ownership percentage. Preferred Stock A class of stock with preferential rights over common stock with respect to payment of dividends and assets of the corporation in liquidation.Nonparticipating Preferred StockP

15、referred 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 of common stock a

16、nd the following: 20022003 2004 Net income$20,000$55,000$62,000Amount retained10,00020,00040,000Amount distributed$10,000$35,000$22,000Cumulative Preferred StockPreferred Dividend: First year in arrears$4,000 Second year in arrears4,000 Third year current4,00012,000Common dividend$10,000Dividends pe

17、r 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 $22,000 DateDescriptionDebitCreditIssuing StockCash1,500,000Preferred Stock500,000Commo

18、n Stock1,000,000The stock accounts 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, $10

19、0 par, and 100,000 shares of common stock, $20 par. DateDescriptionDebitCreditPremium on Issuing StockCash110,000Preferred 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 u

20、sed for dividends.Many states do not permit issuance at a discount.Jan. 5Issued 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. DateDescriptionDebitCreditIssuing St

21、ock for Non-Cash Assets Land120,000Common Stock100,000Paid-In Capital in Excess20,000Jan. 5Acquired land (fair market value cannot 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

22、the fair market value of the asset or fair market value of the stock, whichever can be more clearly determined. DateDescriptionDebitCreditIssuing No-Par StockCash400,000Common Stock400,000Cash36,000Common Stock36,000Jan. 5Issuance of 10,000 shares of no-par common at $40.In most states, both preferr

23、ed 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 $36.Treasury Stock TransactionsA recent survey indicated that over 64% of companies reported treasury stock.Treasury stock is stock th

24、at: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 Treasury Stock is debited for a purchase.When sold, Treasury Stock is credited and any difference is

25、 debited or credited to an account titled Paid-In Capital from Sale of Treasury Stock. DateDescriptionDebitCreditTreasury Stock TransactionsTreasury Stock45,000Cash45,000Cash12,000Treasury Stock9,000Paid-In CapitalTreasury Stock3,000Cash8,000Paid-In CapitalTreasury Stock1,000Treasury Stock9,000Jan.

26、5Purchased 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. 3General Ledger BalanceDateItemDebitCredit DebitCreditAccount: Treasury StockAccount No. 3801/51,000 shs. $4545,00045,0006/2200 shs. $609,00036,0009/3200 shs.

27、 $409,00027,000Treasury Stock Transactions General LedgerTreasury stock is booked at cost upon acquisition and sale. BalanceDateItemDebitCredit DebitCreditAccount: Paid-In Capital Treasury StockAccount No. 3956/2200 shs. $603,0003,0009/3200 shs. $401,0002,000General Ledger BalanceDateItemDebitCredit

28、 DebitCreditAccount: Treasury StockAccount No. 3801/51,000 shs. $4545,00045,0006/2200 shs. $609,00036,0009/3200 shs. $409,00027,000Treasury Stock Transactions General LedgerIf treasury stock is sold for more than its cost, the difference is credited to Paid-In Capital Treasury Stock.Paid-in capital:

29、Common stock, $25 par (20,000 shares authorized and issued) $500,000Excess 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$755,000Stockholders Eq

30、uityDebit balance of Treasury Stock account.Corporations sometimes reduce the 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

31、stock split is declared.Before: 100,000 shares $100 par = $10,000,000After: 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.Accounting for Stock SplitsDividendsDividends are distributio

32、ns of retained earnings to stockholders.Dividends may be paid in cash, stock, or property.Dividends, even on cumulative preferred stock, are never required, but once declared become a legal liability of the corporation.Cash dividends are declared and paid on shares outstanding with three conditions:

33、1. Sufficient retained earnings2. Sufficient cash3. Formal action by the board of directors DateDescriptionDebitCreditAccounting for Cash DividendsCash Dividends42,500Cash Dividends Payable42,500 Cash Dividends Payable 42,500Cash42,500Dec. 1Declared cash dividends on preferred and common.Preferred:

34、$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% preferred stock and $0.30 on the 100,000 shares of $10 par common stock.Jan. 2Paid cash dividend declared on December 1. DateDescriptionDebitCreditAccounting fo

35、r Stock DividendsStock Dividends3,100,000Stock Dividends Distributable2,000,000Paid-In Capital in Excess of Par1,100,000 Stock Dividends Distributable2,000,000 Common Stock2,000,000Dec. 15Declared a 100,000 (5%) stock dividend on common.Market price is $31 a share at declaration date. Stock dividend

36、s 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.Stock Dividends and Stockholders EquityEquity per share$37.80$36.00A Stockholder: Shares owned1,0001,050 Total eq

37、uity$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 outstanding2,000,0002,100,000Stock Dividends a

38、nd Stockholders EquityEquity 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 same before and after the stock dividend. Before After Common stock$40,000,000$42,000,000Excess of issue price over par9,000,00