ACCT 200 1st Edition Lecture 21 Outline of Last Lecture I. Public vs. Private CorporationsII. Stockholders’ RightsIII. Advantages/Disadvantages of a CorporationIV. Types of Common StockV. BE 10-4VI. Preferred StockholdersVII. BE 10-5VIII. Treasury StockIX. BE 10-8X. Retained EarningsXI. MiscellaneousXII. BE 10-10XIII. Stock DividendsXIV. Stock SplitsXV. BE 10-12Outline of Current Lecture I. Journal Entry for Stock DividendsII. Balance Sheet for Stockholder’s EquityIII. E 10-12IV. Return on EquityV. BE 10-15VI. Earnings Per ShareVII. Exam 3 InformationCurrent Lecturejournal entry for stock dividends:Dr dividends Cr common stockequity section on balance sheet shows ending balance as of the date of the balance sheetStatement of stockholder’s equity starts with beginning balance and shows the activity for the year and get to the ending balanceE 10-12transaction – how does it change my assets, liabilities, and equity?Issue common stock – cash increase (asset), equity increaseIssue preferred stock – cash increase (asset), equity increasePurchase treasury stock – cash decrease, equity decreaseDeclare a cash dividend – increase dividends payable (liability), decrease retained earnings (equity)Pay cash dividend – decrease cash, decrease dividends payableStock dividend – no change in the end (retained earnings decreased and common stock increased)return on equity=net income/average stockholders’ equityBE 10-159043 sales220 net income2219 Beginning equity1874 Ending equityAverage equity=(2219+1874)/2=2046.5220/2046.5=return on equity=.1075=10.75% return on equityVERY importantEarnings per share=net income/average shares outstandingTells how much you earned per share of common stockGood to use with next ratio – price-earnings
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