Corporation Organization
The document that indicates the number of authorized shares of a corporation.
Charter
If stock is issued that does not have a par value or a stated value, what is the journal entry?
Debit: Cash
Credit: Common Stock
What is the impact on the accounting equation when a corporation declares a dividend?
Liabilities increase
Stockholder's Equity decrease
What is the name of the stock that is classified as contra-stockholder's equity account?
Treasury Stock
What is an outstanding stock?
A stock that has been sold
If a corporation only has one class of stock it is referred to as:
Common Stock
If XYZ company issues 3000 shares of $8.00 par value common stock for $24.00 each; what accounts will be impacted and for how much
Debit Cash: $72,000
Credit Common Stock: $24,000
Credit Paid in Capital in Excess of Par: $48,000
Copeland, Inc. has 40,000 shares of 5%, $100 par value, cumulative preferred stock and 70,000 shares of $1 par value common stock outstanding at December 31, 2023. There were no dividends declared in 2022. The board of directors declares and pays a $250000 dividend in 2023. What is the amount of dividends received by the common stockholders in 2023?
$50,000
A corporation's own stock that has been reacquired but not retired.
What impact do stock dividends have on retained earnings?
Both cash and stock dividends reduce retained earnings.
Two ways a corporation can be classified:
Pubic or Private
Hsu, Inc. issued 14000 shares of stock at a stated value of $9/share. The total issue of stock sold for $17 per share. The journal entry to record this transaction is:
Debit Cash: $238,000
Credit Common Stock: $126,000
Credit: Paid in Capital in Excess of Stated Value: $112,000
Jasper, Inc. has 40,000 shares of 5%, $100 par value, cumulative preferred stock and 70,000 shares of $1 par value common stock outstanding at December 31, 2022. There were no dividends declared in 2021. The board of directors declares and pays a $550,000 dividend in 2022. What is the amount of dividends received by the preferred stockholders in 2022?
$400,000
When a corporation acquires treasury stock, the effect on the accounting equation is:
Stockholder's Equity: decrease
What date does cash dividends become a legally binding obligation?
Date of they are declared
Board of Directors of a corporation are elected by ____________.
Stockholders
Name of the account credited when stock is issued for more than it par value?
Paid-in Capital in Excess of Par
Green Company has 2000 shares of 4%, $100 par cumulative preferred stock outstanding at December 31, 2023. No dividends have been paid on this stock for 2022 or 2023. Dividends in arrears at December 31, 2023 total
$16,000
A corporation purchases 40,000 shares of its own $10 par common stock for $40 per share, recording it at cost. What will be the effect on total stockholders’ equity?
Decrease by: $1,600,000 (Treasury Stock)
What is the impact on par value per share when there is a stock split?
Value changes based on the split (2 for 1=50% value)
A corporation is subject to more federal and state _______ unlike proprietorships and partnerships.
Regulations
White Company issued 4,000 shares of its $7 par value common stock in payment of its attorney’s bill of $42,000. The bill was for services performed in helping the company incorporate. Journalize this transaction.
Credit: Common Stock: $28,000
Credit: Paid in Capital in Excess of Par: $14,000
If there are dividends in arrears on cumulative preferred stock, what does this mean?
Preferred shareholders must be paid dividends for all years that dividends were in arrears before common stockholders receive any dividends.
10,000 shares of treasury stock of Kellogg, Inc., previously acquired at $16 per share, are sold at $23 per share. Journalize the transaction.
Debit Cash: $230,000
Credit Treasury Stock: $160,000
Credit: Paid-in Capital from Treasury Stock $70,000
What is the journal entry when a stock dividend is declared when the stock's market price is higher than the par value of the common stock?
Debit: Stock Dividends
Credit: Common Stock Dividends Distributable
Credit: Paid-in Capital in Excess of Par--Common Stock