會(huì)計(jì)學(xué)（第21版）課件：Corporations Organization,Capital Stock Transactions,and Dividends

Corporations:Organization,CapitalStockTransactions,andDividendsAccounting,21stEditionWarrenReeveFess

Someoftheactionhasbeenautomated,soclickthemousewhenyouseethislightningboltinthelowerright-handcornerofthescreen.Youcanpointandclickanywhereonthescreen.1.

Describethenatureofthecorporateformoforganization.2.

Listthetwomainsourcesofstockholders’equity.3.

Listthemajorsourcesofpaid-incapital,includingthevariousclassesofstock.4.

Journalizetheentriesforissuingstock.5.

Journalizetheentriesfortreasurystocktransactions.ObjectivesAfterstudyingthischapter,youshouldbeableto:6.

Statetheeffectofstocksplitsoncorporatefinancialstatements.7.

Journalizetheentriesforcashdividendsandstockdividends.8.

Describeandillustratethereportingofstockholders’equity.9.

Computeandinterpretthedividendyieldoncommonstock.ObjectivesEmployeesOfficers(selectedbyboardofdirectors)BoardofDirectors(electedbystockholders)OrganizationalStructureofaCorporationStockholders(ownersofcorporationstock)FormingaCorporationFirststepistofileanapplicationofincorporation

withthestate.Becausestatelawsdiffer,corporationsoftenorganizeinstateswithmorefavorablelaws.MorethanhalfofthelargestcompaniesareincorporatedinDelaware.Stategrantsacharter

orarticlesofincorporation

whichformallycreatethecorporation.Management

andboardofdirectors

prepare

bylawswhichareoperationrulesandprocedures.FormingaCorporationOnJanuary5,thefirmpaidtheorganizationcostsof$8,500.Thisamountincludeslegalfees,taxesandlicenses,promotioncosts,etc.Jan. 5 OrganizationCosts 850000 Paidcostoforganizingthecorporation.Cash 850000Stockholders’EquityAssetsLiabilitiesStockholders’EquityStockholders’Equity=Assets–LiabilitiesRepresentsthestockholders’shareofthetotalassets.Stockholders’EquityAssetsStockholders’EquityLiabilitiesStockholders’EquityStockholders’EquityTherearetwosourcesofstockholders’equity.Stockholders’Equity:Paid-incapital: Commonstock $xxxxx Retainedearnings xxxx Total $xxxxx1StockholderinvestmentsStockholders’EquityAssetsLiabilitiesStockholders’EquityStockholders’EquityStockholders’Equity:

Paid-incapital: Commonstock $xxxxx

Retainedearnings xxxx Total $xxxxxReinvestedearnings2Stockholders’EquityAssetsLiabilitiesStockholders’EquityStockholders’EquityAuthorizedIssuedOutstandingNumberofSharesSourcesofPaid-InCapitalMajorRightsthatAccompanyOwnershipofaShareofStock1. Therighttovoteinmattersconcerningthecorporation.2. Therighttoshareindistributionofearnings.3. Therighttoshareinassetsonliquidation.SourcesofPaid-InCapitalThetwoprimaryclassesofpaid-incapitalarecommonstockandpreferredstock.Theprimaryattractivenessofpreferredstocksisthattheyarepreferredovercommonastodividends.MoneyavailablefordividendsCommonStockholdersPreferredStockholdersClassesofStockholdersCommonStock—thebasicownershipofstockwithrightstovoteinelectionofdirectors,shareindistributionofearnings,andpurchaseadditionalshares.PreferredStock—Aclassofstockwithpreferentialrightsovercommonstockinpaymentofdividendsandcompanyliquidation.ClassesofStockholdersNonparticipatingPreferredStockAnonparticipatingpreferredstockislimitedtoacertainamount.Assume1,000sharesof$4nonparticipatingpreferredstockand4,000sharesofcommonstockandthefollowing:

Netincome $20,000 $55,000 $62,000Amountretained 10,000

20,000

40,000Amountdistributed $10,000 $35,000 $22,000

2005

2006

2007NonparticipatingPreferredStockDividendspershare:Preferred $4.00 $4.00 $4.00Common $1.50 $7.75 $4.50Amountdistributed $10,000 $35,000 $22,000Preferreddividend(1,000shares) 4,000 4,000 4,000Commondividend(4,000shares) $6,000 $31,000 $18,000Assume1,000sharesof$4cumulativepreferredstockand4,000sharesofcommonstock.Nodividendswerepaidin2005and2006.

CumulativePreferredStockSo,preferreddividendsaretwoyearsinarrears.OnMarch7,2007,theboardofdirectorsdeclaresdividendsof$22,000.CumulativePreferredStock$4,000$4,000$4,000CumulativePreferredStockPreferredStockDividendsDividendsPaidin2007Totaldividendspaid,$22,000$4,0002005(Inarrears)$4,0002006(Inarrears)$4,0002007(Currentdividend)PreferredStockCommonStock$10,000OtherSourcesofPaid-inCapitalOnApril20thecityofMorainedonatedlandtoMerrickCorporationasanincentivetorelocateitsheadquarterstoMoraine.Thelandwasvaluedat$500,000.Apr. 20 Land 50000000 RecordedlanddonatedbythecityofMoraine.DonatedCapital 50000000Acorporationisauthorizedtoissue10,000sharesofpreferredstock,$100par,and100,000sharesofcommonstock,$20par.IssuingStockIssuingStockOnApril1,one-halfofeachclassofauthorizedstockisissuedatparforcash.Apr. 1 Cash 1,50000000 Issuedpreferredstockandcommonstockatpar.PreferredStock 50000000CommonStock 1,00000000IssuingStockCommonStockandPreferredStockaccountsarecontrollingaccounts.Arecordofeachstockholders’name,address,andnumberofsharesiskeptinastockholders’subsidiaryledger.IssuingStockataPremiumOnMarch15,CaldwellCompanyissues2,000sharesof$50parpreferredstockforcashat$55.Mar. 15 Cash 11000000 Issued2,000sharesof$50parpreferredstockat$55.PreferredStock 10000000Paid-inCapitalinExcessofPar--PreferredStock 1000000Whenstockisissuedformorethanitspar,thestockhassoldatapremium.Ithassoldatadiscount

ifissuedforlessthanitspar.

The$10,000excessisrecordedinaseparateaccount

becausesomestatesdonotconsiderthistobepartoflegalcapitalandmaybeusedfordividends.IssuingStockataPremiumOnNov.12,acorporationacquiredlandforwhichthefairmarketvaluecannotbedetermined.Thecorporationissued10,000sharesof$10parcommonthathasacurrentmarketvalueof$12inexchangefortheland.Nov. 12 Land 12000000 Issued$10parcommonstockvaluedat$12pershare,forland.CommonStock 10000000Paid-inCapitalinExcessofPar 2000000IssuingStockataPremiumStockissuedforassetsotherthancashshouldberecordedatthefairmarketvalueofthe

asset

orfairmarketvalueofthestock,

whichevercanbemoreclearlydetermined.IssuingStockataPremiumIssuingStockatNo-ParOnFebruary23,acorporationissues10,000sharesofno-parcommonstockat$40ashare.Feb. 23 Cash 40000000 Issued10,000sharesofno-parcommonstockat$40.CommonStock 40000000IssuingStockatNo-ParLater,onMarch9,thecorporationissues1,000additionalsharesat$36.Mar. 9 Cash 3600000 Issued1,000sharesofno-parcommonstockat$36.CommonStock 3600000IssuingStockatNo-ParSomestatesrequirethattheentireproceedsfromthesaleofno-parstockbetreatedaslegalcapital.IssuingStockatNo-ParAlso,no-parstockmaybeassignedastatedvaluepershare.Thestatedvalueisrecordedsimilartoaparvalue.IssuingStockwithaStatedValueOnMarch30,issued1,000sharesofno-parcommonstockat$40;statedvalue,$25.Mar. 30 Cash 4000000 Issued1,000sharesofno-parcommonstockat$36;statedvalue,$25.CommonStock 2500000Paid-inCapitalinExcessofStatedValue 1500000TreasuryStockTransactionsOccasionally,acorporationbuysbackitsownstockforthepurposeoflaterreissuingit.Thisstockisreferredtoastreasurystock.Treasurystock

isstockthat: 1. hasbeenissuedasfullypaid. 2. hasbeenreacquiredbythe corporation. 3. hasnotbeencanceledorreissued.TreasuryStockTransactionsAcommonlyusedmethodofaccountingfortreasurystockisthecostmethod.TreasuryStockTransactionsCostMethodOnJanuary5,afirmpurchased1,000sharesoftreasurystock(commonstock,$25par)at$45pershare.Jan. 5 TreasuryStock 4500000 Purchased1,000sharesoftreasurystockat$45.Cash 4500000OnJune2,sold200sharesoftreasurystockat$60pershare.June2 Cash 1200000 Sold200sharesoftreasurystockat$60.TreasuryStock 900000Paid-inCapitalfromsaleofTreasuryStock 300000TreasuryStockTransactionsCostMethodOnSeptember3,sold200sharesoftreasurystockat$40pershare.Sep. 3 Cash 800000 Paid-inCapitalfromSaleof TreasuryStock 100000 Sold200sharesoftreasurystockat$60.TreasuryStock 900000TreasuryStockTransactionsCostMethodStockSplitsAcorporationsometimesreducestheparorstatedvalueoftheircommonstockandissuesaproportionatenumberofadditionalshares.Thisiscalledastocksplit.StockSplitsBEFORESTOCKSPLIT4shares,$100par$400totalparvalue20shares,$20parAFTER5-1STOCKSPLIT$400totalparvalueStockSplitsAstocksplitdoesnotchangethebalanceofanycorporationaccounts.However,itcanmakethestockmoreattractivetoinvestorsbyreducingthepriceofashare,AccountingforCashDividendsDividendsaredistributionsof

retainedearnings

tostockholders.Dividendsmaybepaidincash,stock,orproperty.Dividends,evenoncumulativepreferredstock,areneverrequired,butoncedeclaredbecomealegalliability

ofthecorporation.Corporationsgenerallydeclareandpaycashdividends

onsharesoutstandingwhenthreeconditionsexist: 1. Sufficientretainedearnings

AccountingforCashDividends

2. Sufficientcash

3. FormalactionbytheboardofdirectorsRetainedEarnings50,000AccountingforCashDividendsTherearethreeimportantdatesrelatingthedividends.AccountingforCashDividendsFirstisthedateofdeclaration.AssumethatonDecember1,HiberCorporationdeclaresa$42,500dividend.Dec. 1 CashDividends 4250000 Declaredcashdividend.CashDividendPayable 4250000DateofDeclarationAccountingforCashDividendsThesecondimportantdateisthedateofrecord.ForHiberCorporationthiswouldbeDecember11.AccountingforCashDividendsAccountingforCashDividendsOnthisdate,ownershipofsharesdetermineswhoreceivesthedividend.Noentryisrequired.Thethirdimportantdateisthedateofpayment.OnJanuary2,Hiberissuesdividendchecks.AccountingforCashDividends2AccountingforCashDividendsJan. 2 CashDividendsPayable 4250000 Paidcashdividends.Cash 4250000DateofPaymentAccountingforStockDividendsAdistributionofdividendstostockholdersintheformofthefirm’sownsharesiscalledastockdividend.AccountingforStockDividendsStockdividendstransferproratasharesofstocktostockholders.AssumeHendrixCorporationissuesa5%stockdividendoncommonstock,$20par,2,000,000sharesissued.AccountingforStockDividendsDec. 15 StockDividends 3,10000000 Declaredstockdividend.HendrixCorporation,December15(beforedividend)CommonStock,$20par $40,000,000Paid-inCapitalinExcessofPar--CommonStock 9,000,000RetainedEarnings 26,600,000StockDividendsDistributable 2,00000000Paid-inCapitalinExcessofPar—CommonStock 1,10000000AccountingforStockDividendsJan.10 StockDividendsDistributable 2,00000000 Issuedstocksforthestockdividend.CommonStock 2,00000000OnJanuary10,HendixCorporationissuesthestock.Thisactionincreasesthenumberofsharesoutstandingby100,000.AccountingforStockDividendsHendrixCorporation,December15(beforedividend)CommonStock,$20par $40,000,000Paid-inCapitalinExcessofPar--CommonStock 9,000,000RetainedEarnings 26,600,000 $75,600,000HendrixCorporation,January10(afterdividend)CommonStock,$20par $42,000,000Paid-inCapitalinExcessofPar--CommonStock 10,100,000RetainedEarnings 23,500,000 $75,600,000FinancialAnalysisandInterpretationDividendYield 2004 2003Dividendspershareofcommon $0.80 $0.60Marketpricepershareofcommon $20.50 $13.50

DividendsperShareofCommonStockMarketPriceperShareofCommonStockDividendYield$.60$13.50DividendYield,2006=4.4%DividendYield,2007$.80$20.50=3.9%Use: Toindicatetherateofreturntocommonstockholdersintermsofdivide