ACCT 200 1st Edition Lecture 20 Outline of Last Lecture I BE 9 9 II BE 9 10 III Installment Notes IV BE 9 17 V E 9 16 VI Selling Stocks Vs Bonds VII BE 9 18 Outline of Current Lecture I Public vs Private Corporations II Stockholders Rights III Advantages Disadvantages of a Corporation IV Types of Common Stock V BE 10 4 VI Preferred Stockholders VII BE 10 5 VIII Treasury Stock IX BE 10 8 X Retained Earnings XI Miscellaneous XII BE 10 10 XIII Stock Dividends XIV Stock Splits XV BE 10 12 Current Lecture private corporations can t become a shareholder just by contacting a broker like you can for public corporations right to receive dividends only if company declares them know corporations advantages and disadvantages Shareholders aren t affected if a corporation is sued Banks are less likely to lend to a sole proprietorship hardly ever know definitions of types of common stock Authorized shares 10 000 Issued shares 9000 Treasury shares 500 company bought its own shares back Outstanding shares 9000 500 8500 shares BE 10 4 issue 1000 shares of 1 par value stock for 20 per share Journal entry Cash 20 000 common stock 1000 par value shares issued additional paid in capital 19 000 total cash amt in common stock preferred stockholders give up their right to vote BE 10 5 issue 1000 shares of 01 preferred stock for 22 per share Cash 22 000 preferred stock 10 additional paid in capital 21 990 treasury stock contra negative equity account credit cash on test will have numbers without brackets have to find total equity by adding com stk additional paid in capital and retained earnings then subtracting treasury stock BE 10 8 company has 1000 shares issued to shareholders During the year company repurchases its own stock 100 shares at 28 Record transaction should know it s a treasury transaction Treasury stock cash 2800 2800 Effect on accounting equation Decreases asset cash decreases equity Treasury stock doesn t issue dividends accumulated deficit negative retained earnings treasury stock balance sheet Notes payable balance sheet Interest expense income statement Dividends only found in one place statement of stockholder s equity Cash balance sheet Dividends payable balance sheet Interest income income statement Dividends usually paid in cash but don t have to be can be property occasionally Have to give investors the same amount of money per share 3 important dates Declaration set up liability record no journal entry payment pay off liability BE 10 10 3000 shares of common stock outstanding Declare a 50 dividend on Oct 1 Date of record is Oct 15 Payment date is Oct 31 Record all appropriate journal entries Declaration date 10 1 Dividends 1500 dividends payable 1500 liabilities increasing equity decreasing Record date 10 15 no journal entry Payment date 10 31 Dividends payable 1500 cash 1500 assets and liabilities decreasing Stock dividend 1000 shares in company you own 100 shares 20 stock dividend for the company Company will issue 1000 2 200 more shares After the stock dividend 1200 shares outstanding for the company You 100 shares 10 ownership so you will get 10 of the new stock shares from the dividend 200 10 20 new shares After the stock dividend you own 120 shares Before the stock dividend you have 100 1000 10 After the stock dividend you have 120 1200 10 Ownership will not change after the stock dividend stock split changes par value of stock changes number of shares issued and outstanding 5 for 1 split 100 000 shares 5 par value After split 100 000 5 500 000 shares 5 1 par value BE 10 12 20 000 shares of stock issued and outstanding 1 par value market price is 25 If they do a 2 for 1 split what is the information after the split 40 000 shares issued and outstanding 50 par value 12 50 market price
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