Misc
A corporation is its own legal entity but its existence is not separate from its owners. (True or False?)
False- Its existence is separate its owners, a corp is its own legal entity, and has rights and privileges of its own
An arbitrary amount assigned to each share of stock when its authorized
What is par value?
For 50 bonus points: Explain what is market price?
Undeclared dividends from current and prior years are lost in future years.
What is a noncumulative dividend?
-- Must explain cumulative stock as well for the full points
Date of Payment journal entry
Cash zzzzzz
Paid $x per share cash dividend
Recording a small stock dividend
Date Stock Dividends yyyyy
Common Stock Dividend Distributable zzzz
Contributed capital in excess of par value bbbb
On May 8, Isaiah Inc purchased 2,000 of its own shares of stock in the open market for $4 per share. Journal entry for this?
** How does this impact the balance sheet?
May 8 Treasury Stock, Common 8,000
Cash 8,000
Purchase 2,000 Treasury shares at $4 per share
Shown as a reduction in total Stockholders equity on the balance sheet
A separate class of stock that has priority over common shares in
- dividend distributions
- distribution of assets in case of liquidation
What is preferred stock?
Three important dates for dividends
Date of Declaration - record liability for dividend
Date of Record - who owns the stock at this date (who is eligible to receive a dividend payout)
Date of Payment - record payment of cash to stockholders
This is stock dividends and is used to keep the market price on the stock affordable. This is different from cash dividends.
Large Stock Dividend
On December 31, 2016, Trout Co. declared a 40% stock dividend, when the stock was selling for $8 per share. There are 50,000 outstanding shares and the par value is $1.
Dec 31 Stock Dividends 20,000
Common Stock Dividend Distributed 20,000
Declared a 40% stock dividend
(50,000 outstanding shares x 40%= 20,000 shares x $1 par value)
**Why do we use par value instead of market value? Because this is a------
If we are recording a journal entry that is cash and common stock issued at a market price, what is important to include.
Paid in Capital in excess of par
When corp buy back shares of their own stock in the market
Treasury Stock
The journal entry for Date of Declaration includes two accounts, what does the journal entry look like?
Date Dividends Amount Debited
Common dividend payable Amount Credited
Declared $x per share cash dividend
For 50 bonus points: What should we journal for the date of record?
A stock dividend does not change the....
assets, liabilities, or total Stockholders equity in a corporation
an individual stockholder's proportionate interest (equity) in the corporation
Earnings per share equation?
Basic Earnings per share = (Net Income- Preferred Dividends) / (Weighted-average common shares outstanding)