ACC 221 1st Edition Lecture 30 Outline of Previous Lecture Section 29 Bonds Cont Bond Liability Face Value o Discount Bonds o Premium Bonds o Par Bonds o Maturity Payments o Semiannual Interest Outline of Current Lecture Section 30 Equity Common Stock o Shares o Selling common stock with par value shares o Authorizing shares o Earnings share Current Lecture Section 30 Equity Common Stock o Shares Common stock owner s claim to assets from investment Retained earnings owner s claim to assets from operating the business o Selling common stock with par value shares Par value no real meaning adding a value amount to shares Most companies assign a very low value to stock because they do not want the market value to be below their par value so they do not have to sell Legally required to record par value into common stock 1 par value share selling for 100 share selling 100 shares Dr cash 10000 Cr common stock 100 shares x 1 100 Cr Paid in capital in excess of par value 9900 o Authorizing shares Doesn t cost anything to authorize can go back to state to get more These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Larger shares you get less often you have to go get more and do paperwork Sell 10000 shares of stock in 2000 increments When in shareholders hand considered outstanding Treasury stock company buying back their stock excess money Not unissued just brought back into company Outstanding total issued bought back 8000 o Earnings share Net income outstanding shares of stock Outstanding shares tells how to pay a dividend Common stock 1 million 10000 issues Treasury 2000 not given shares outstanding on any financial records Buy back 2000 shares Dr treasury stock 20000 Cr Cash 20000 Treasury is a contra equity account Normal balance in debits Appears on balance sheet as negative
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