ACCOUNTING會(huì)計(jì)英語(yǔ)主講教師：朱靖Corporations:

Organization,StockTransactions,Dividends,andRetainedEarningsChapter12Accounting,ThirdEditionIdentifythemajorcharacteristicsofacorporation.Recordtheissuanceofcommonstock.Explaintheaccountingfortreasurystock.Differentiatepreferredstockfromcommonstock.Preparetheentriesforcashdividendsandstockdividends.Identifytheitemsthatarereportedinaretainedearningsstatement.Prepareandanalyzeacomprehensivestockholders’equitysection.StudyObjectivesCashdividendsStockdividendsStocksplitsCorporateOrganizationandStockTransactionsDividendsRetainedEarningsStatementPresentationandAnalysisCorporateformoforganizationCommonstockissuesTreasurystockPreferredstockRetainedearningsrestrictionsPriorperiodadjustmentsRetainedearningsstatementPresentationAnalysisCorporations:Organization,StockTransactions,DividendsandRetainedEarningsAnentityseparateanddistinctfromitsowners.TheCorporateFormofOrganizationClassifiedbyPurposeNot-for-ProfitForProfitClassifiedbyOwnershipPubliclyheldPrivatelyheldMcDonald’sFordMotorCompanyPepsiCoGoogleSalvationArmyAmericanCancerSocietyGatesFoundationCargillInc.SeparateLegalExistenceLimitedLiabilityofStockholdersTransferableOwnershipRightsAbilitytoAcquireCapitalContinuousLifeGovernmentRegulationsAdditionalTaxesCorporateManagementCharacteristicsthatdistinguishcorporationsfromproprietorshipsandpartnerships.CharacteristicsofaCorporationSO1Identifythemajorcharacteristicsofacorporation.AdvantagesDisadvantagesCharacteristicsofaCorporationSO1Identifythemajorcharacteristicsofacorporation.StockholdersChairmanandBoardofDirectorsPresidentandChiefExecutiveOfficerGeneralCounselandSecretaryVicePresidentMarketingVicePresidentFinance/ChiefFinancialOfficerVicePresidentOperationsVicePresidentHumanResourcesTreasurerControllerIllustration12-1CorporationorganizationchartFileapplicationwiththeSecretaryofState.Stategrantscharter.Corporationdevelopsby-laws.InitialSteps:FormingaCorporationSO1Identifythemajorcharacteristicsofacorporation.Companiesgenerallyincorporateinastatewhoselawsarefavorabletothecorporateformofbusiness(Delaware,NewJersey).Corporationsexpenseorganizationcostsasincurred.1. Voteinelectionofboardofdirectorsandonactionsthatrequirestockholderapproval.Stockholdershavetherightto:OwnershipRightsofStockholdersSO1Identifythemajorcharacteristicsofacorporation.2. Sharethecorporateearningsthroughreceiptofdividends.Illustration12-33. Keepthesamepercentageownershipwhennewsharesofstockareissued(preemptiveright*).Stockholdershavetherightto:OwnershipRightsofStockholdersSO1Identifythemajorcharacteristicsofacorporation.*Anumberofcompanieshaveeliminatedthepreemptiveright.Illustration12-34. Shareinassetsuponliquidationinproportiontotheirholdings.Thisiscalledaresidualclaim.Stockholdershavetherightto:OwnershipRightsofStockholdersSO1Identifythemajorcharacteristicsofacorporation.Illustration12-3OwnershipRightsofStockholdersSO1Identifythemajorcharacteristicsofacorporation.ClassACOMMONSTOCKClassACOMMONSTOCKPARVALUE$1PERSHAREPARVALUE$1PERSHAREStockCertificateNameofcorporationStockholder’snameClassSharesSignatureofcorporateofficialPrenumberedIllustration12-4StockIssueConsiderationsSO1Identifythemajorcharacteristicsofacorporation.Charterindicatestheamountofstockthatacorporationisauthorizedtosell.Numberofauthorizedsharesisoftenreportedinthestockholders’equitysection.AuthorizedStockStockIssueConsiderationsSO1Identifythemajorcharacteristicsofacorporation.Corporationcanissuecommonstockdirectlytoinvestorsorindirectlythroughaninvestmentbankingfirm.Factorsinsettingpriceforanewissueofstock:thecompany’santicipatedfutureearningsitsexpecteddividendratepershareitscurrentfinancialpositionthecurrentstateoftheeconomythecurrentstateofthesecuritiesmarketIssuanceofStockStockIssueConsiderationsSO1Identifythemajorcharacteristicsofacorporation.Stockofpubliclyheldcompaniesistradedonorganizedexchanges.Interactionbetweenbuyersandsellersdeterminesthepricespershare.Pricessetbythemarketplacetendtofollowthetrendofacompany’searningsanddividends.Factorsbeyondacompany’scontrol,maycauseday-to-dayfluctuationsinmarketprices.MarketValueofStockStockIssueConsiderationsSO1Identifythemajorcharacteristicsofacorporation.Yearsago,parvaluedeterminedthelegalcapitalpersharethatacompanymustretaininthebusinessfortheprotectionofcorporatecreditors.Todaymanystatesdonotrequireaparvalue.No-parvaluestockisquitecommontoday.Inmanystatestheboardofdirectorsassignsastatedvalue

tono-parshares.ParandNo-ParValueStockPaid-inCapitalRetainedEarningsAccountPaid-inCapitalinExcessofParAccountTwoPrimarySourcesofEquityCommonStockAccountPreferredStockAccountCorporateCapitalPaid-incapital

isthetotalamountofcashandotherassetspaidinbystockholdersinexchangeforcapitalstock.SO1Identifythemajorcharacteristicsofacorporation.Paid-inCapitalRetainedEarningsAccountPaid-inCapitalinExcessofParAccountTwoPrimarySourcesofEquityCommonStockAccountPreferredStockAccountCorporateCapitalRetainedearnings

isnetincomethatacorporationretainsforfutureuse.SO1Identifythemajorcharacteristicsofacorporation.CorporateCapitalComparisonoftheowners’equity(stockholders’equity)accountsreportedonabalancesheetforaproprietorshipandacorporation.Illustration12-6SO1Identifythemajorcharacteristicsofacorporation.IssuingParValueCommonStockforCashPrimaryobjectives:Identifyspecificsourcesofpaid-incapital.Maintaindistinctionbetweenpaid-incapitalandretainedearnings.

AccountingforCommonStockIssuesSO2Recordtheissuanceofcommonstock.IssuingNo-ParCommonStockforCashAvoidscontingentliabilityforstockholders.Illustration:

VikingCorporationissued300sharesof$10parvaluecommonstockfor$4,100.PrepareVikings’journalentry.Cash 4,100 Commonstock(300x$10) 3,000 Paid-incapitalinexcessofpar 1,100AccountingforCommonStockIssuesSO2Recordtheissuanceofcommonstock.Illustration:

KnopfleCorporationissued600sharesofno-parcommonstockfor$10,200.PrepareKnopfle’sjournalentryif(a)thestockhasnostatedvalue,and(b)thestockhasastatedvalueof$2pershare.Cash 10,200 Commonstock 10,200Cash 10,200 Commonstock(600x$2) 1,200 Paid-incapitalinexcessofstatedvalue 9,000a.b.AccountingforCommonStockIssuesSO2Recordtheissuanceofcommonstock.IssuingCommonStockforServicesorNoncashAssetsCorporationsalsomayissuestockfor:Services(attorneysorconsultants).Noncashassets(land,buildings,andequipment).AccountingforCommonStockIssuesCostiseitherthefairmarketvalueoftheconsiderationgivenup,orthefairmarketvalueoftheconsiderationreceived,whicheverismoreclearlydeterminable.SO2Recordtheissuanceofcommonstock.Illustration:

OnMarch2nd,LeoneCo.issued5,000sharesof$5parvaluecommonstocktoattorneysinpaymentofabillfor$30,000forservicesprovidedinhelpingthecompanytoincorporate.Organizationalexpense 30,000 Commonstock(5,000x$5) 25,000 Paid-incapitalinexcessofpar 5,000AccountingforCommonStockIssuesSO2Recordtheissuanceofcommonstock.Illustration:

KaneInc.’s$10parvaluecommonstockisactivelytradedatamarketvalueof$15pershare.Kaneissues5,000sharestopurchaselandadvertisedforsaleat$75,000.Journalizetheissuanceofthestockinacquiringtheland.Land(5,000x$15) 75,000 Commonstock(5,000x$10) 50,000 Paid-incapitalinexcessofpar 25,000AccountingforCommonStockIssuesSO2Recordtheissuanceofcommonstock.Paid-inCapitalRetainedEarningsAccountPaid-inCapitalinExcessofParAccountLess:TreasuryStockAccountTwoPrimarySourcesofEquityCommonStockAccountPreferredStockAccountAccountingforTreasuryStockSO3Explaintheaccountingfortreasurystock.Treasurystock-corporation’sownstockthatithasreacquiredfromshareholders,butnotretired.Corporationspurchasetheiroutstandingstock:Toreissuesharestoofficersandemployeesunderbonusandstockcompensationplans.Toenhancethestock’smarketvalue.Tohaveadditionalsharesavailableforuseinacquisitionofothercompanies.Toincreaseearningspershare.Toridcompanyofdisgruntledinvestors,perhapstoavoidatakeover.AccountingforTreasuryStockSO3Explaintheaccountingfortreasurystock.PurchaseofTreasuryStockTwoacceptablemethods:Costmethod(morewidelyused).

ParorStatedvaluemethod.Treasurystock,reducesstockholders’equity.AccountingforTreasuryStockSO3Explaintheaccountingfortreasurystock.Treasurystock(1,000x$28) 28,000 Cash 28,000Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.Recordthejournalentryforthefollowingtransaction:April1stthecompanyre-acquired1,000sharesfor$28pershare.AccountingforTreasuryStockSO3Explaintheaccountingfortreasurystock.AccountingforTreasuryStockStockholders’EquitywithTreasurystockThenumberofsharesissued(15,000),outstanding(14,000)andinthetreasury(1,000)aredisclosed..SO3Explaintheaccountingfortreasurystock.SaleofTreasuryStockAboveCostBelowCostBothincreasetotalassetsandstockholders’equity.AccountingforTreasuryStockSO3Explaintheaccountingfortreasurystock.Cash(500x$30) 15,000 Treasurystock(500x$28) 14,000Illustration:OnApril1st,UCCompanyreacquired1,000sharesofits$1par,commonstock,for$28pershare.June1stSold500sharesofitsTreasuryStockfor$30pershare. Paid-incapitaltreasurystock 1,000AccountingforTreasuryStockAboveCostSO3Explaintheaccountingfortreasurystock.Cash(300x$9) 2,700 Treasurystock(300x$28) 8,400Illustration:Recordthejournalentryforthefollowingtransaction:Oct.15thSold300sharesofitsTreasuryStockfor$9pershare.Paid-incapitaltreasurystock 1,000Retainedearnings 4,700LimitedtobalanceonhandAccountingforTreasuryStockBelowCostSO3Explaintheaccountingfortreasurystock.Cash(100x$11) 1,100 Treasurystock(100x$28) 2,800Illustration:Recordthejournalentryforthefollowingtransaction:Oct.30thSold100sharesofitsTreasuryStockfor$11pershare.Retainedearnings 1,700AccountingforTreasuryStockBelowCostSO3Explaintheaccountingfortreasurystock.AccountingforTreasuryStockStockholders’EquitywithTreasurystockThenumberofsharesissued(15,000),outstanding(14,900)andinthetreasury(100)aredisclosed.SO3Explaintheaccountingfortreasurystock.Featuresoftenassociatedwithpreferredstock.Preferenceastodividends.Preferenceastoassetsinliquidation.Nonvoting.SO4Differentiatepreferredstockfromcommonstock.PreferredStockAccountingforpreferredstockatissuanceissimilartothatforcommonstock.Illustration:

AckerInc.issues5,000sharesof$100parvaluepreferredstockforcashat$130pershare.Journalizetheissuanceofthepreferredstock.PreferredStockCash(5,000x$130) 650,000 Preferredstock(5,000x$100) 500,000 Paid-incapitalinexcessofpar– Preferredstock 150,000Preferredstockmayhaveaparvalueorno-parvalue.SO4Differentiatepreferredstockfromcommonstock.DividendPreferencesRighttoreceivedividendsbeforecommonstockholders.Persharedividendamountisstatedasapercentageofpreferredstock’sparvalueorasaspecifiedamount.Cumulativedividend

–preferredstockholdersmustbepaidbothcurrent-yeardividendsandanyunpaidprior-year(arrears)dividendsbeforecommonstockholdersreceivedividends.PreferredStockSO4Differentiatepreferredstockfromcommonstock.Adistributionofcashorstocktostockholdersonaprorata(proportional)basis.TypesofDividends:DividendsSO5Preparetheentriesforcashdividendsandstockdividends.Cashdividends.Propertydividends.Dividendsexpressed:(1)asapercentageoftheparorstatedvalue,or(2)asadollaramountpershare.Script(promissorynote).Stockdividends.Dividendsrequireinformationconcerningthreedates:DividendsSO5Preparetheentriesforcashdividendsandstockdividends.CashDividendsForacorporationtopayacashdividend,itmusthave:Retainedearnings-Paymentofcashdividendsfromretainedearningsislegalinallstates.Adequatecash.AdeclarationofdividendsbytheBoardofDirectors.DividendsSO5Preparetheentriesforcashdividendsandstockdividends.Illustration:

Whatwouldbethejournalentriesmadebyacorporationthatdeclareda$50,000cashdividendonMarch10,payableonApril6toshareholdersofrecordonMarch25?March10(DeclarationDate)Retainedearnings 50,000Dividendspayable 50,000March25(DateofRecord)

NoentryApril6(PaymentDate)DividendsDividendspayable 50,000Cash 50,000SO5Preparetheentriesforcashdividendsandstockdividends.AllocatingCashDividendsBetweenPreferredandCommonStockDividendsHoldersofcumulativepreferredstockmustbepaidanyunpaidprior-yeardividendsbeforecommonstockholdersreceivedividends.SO5Preparetheentriesforcashdividendsandstockdividends.Exercise:

ArnezCorporationwasorganizedonJanuary1,2007.Duringitsfirstyear,thecorporationissued2,000sharesof$50parvaluepreferredstockand100,000sharesof$10parvaluecommonstock.AtDecember31,thecompanydeclaredthefollowingcashdividends:2007,$6,000,2008,$12,000,and2009,$28,000.Instructions:(a)Showtheallocationofdividendstoeachclassofstock,assumingthepreferredstockdividendis8%andnotcumulative.DividendsSO5Preparetheentriesforcashdividendsandstockdividends.Exercise:

(a)Showtheallocationofdividendstoeachclassofstock,assumingthepreferredstockdividendis8%andnotcumulative.Dividends*

2,000sharesx$50parx8%=$8,000*SO5Preparetheentriesforcashdividendsandstockdividends.Exercise:

(b)Showtheallocationofdividendstoeachclassofstock,assumingthepreferredstockdividendis9%andcumulative.Dividends*

2,000sharesx$50parx9%=$9,000***

2007Pfd.dividends$9,000–declared$6,000=$3,000

**SO5Preparetheentriesforcashdividendsandstockdividends.Exercise:

(c)JournalizethedeclarationofthecashdividendatDecember31,2009,underpart(b).DividendsRetainedearnings 28,000 Dividendspayable 28,000Journalentry:SO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsProratadistributionofthecorporation’sownstock.StockDividendsResultsindecreaseinretainedearningsandincreaseinpaid-incapital.Illustration12-14SO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsReasonswhycorporationsissuestockdividends:Satisfystockholders’dividendexpectationswithoutspendingcash.Increasemarketabilityofcorporation’sstock.Emphasizethataportionofstockholders’equityhasbeenpermanentlyreinvestedinthebusiness.StockDividendsSO5Preparetheentriesforcashdividendsandstockdividends.SizeofStockDividendsSmallstockdividend

(lessthan20–25%ofthecorporation’sissuedstock,recordedatfairmarketvalue)Largestockdividend

(greaterthan20–25%ofissuedstock,recordedatparvalue)*Assumptionthatasmallstockdividendwillhavelittleeffectonmarketpriceofoutstandingshares.*SO5Preparetheentriesforcashdividendsandstockdividends.StockDividends10%stockdividendisdeclaredRetainedearnings (5,000x10%x$40)20,000Commonstockdividendsdistributable500Additionalpaid-incapital19,500StockissuedCommonstockdiv.distributable500Commonstock(5,000x10%x$1)500Illustration:HHInc.has5,000sharesissuedandoutstanding.Thepershareparvalueis$1,bookvalue$32andmarketvalueis$40.SO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsStockholders’EquitywithDividendsDistributableSO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsEffectsofStockDividends$0SO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsWhichofthefollowingstatementsaboutsmallstockdividendsistrue?AdebittoRetainedEarningsfortheparvalueofthesharesissuedshouldbemade.Asmallstockdividenddecreasestotalstockholders’equity.Marketvaluepershareshouldbeassignedtothedividendshares.Asmallstockdividendordinarilywillhavenoeffectonbookvaluepershareofstock.QuestionSO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsInthestockholders’equitysection,CommonStockDividendsDistributableisreportedasa(n):deductionfromtotalpaid-incapitalandretainedearnings.additiontoadditionalpaid-incapital.deductionfromretainedearnings.additiontocapitalstock.QuestionSO5Preparetheentriesforcashdividendsandstockdividends.StockDividendsStockSplitReducesthemarketvalueofshares.Noentryrecordedforastocksplit.Decreaseparvalueandincreasenumberofshares.StockSplitSO5Preparetheentriesforcashdividendsandstockdividends.2for1StockSplitNoEntry--Disclosurethatparisnow$.50andsharesoutstandingare10,000.Illustration:HHInc.has5,000sharesissuedandoutstanding.Thepershareparvalueis$1,bookvalue$32andmarketvalueis$40.SO5Preparetheentriesforcashdividendsandstockdividends.StockSplitEffectsofStockSplitSO5Preparetheentriesforcashdividendsandstockdividends.StockSplitRetainedearnings

isnetincomethatacompanyretainsforuseinthebusiness.NetincomeincreasesRetainedEarningsandanetlossdecreasesRetainedEarnings.Retainedearningsispartofstockholders’claimontotalassetsofthecorporation.DebitbalanceinRetainedEarningsisidentifiedasadeficit.RetainedEarningsSO6Identifytheitemsreportedinaretainedearningsstatement.Restrictionscanresultfrom:Legalrestrictions.Contractualrestrictions.Voluntaryrestrictions.RetainedEarningsRestrictionsCompaniesgenerallydiscloseretainedearningsrestrictionsinthenotestothefinancialstatements.SO6Identifytheitemsreportedinaretainedearningsstatement.CorrectionsofErrorsResultfrom:mathematicalmistakesmistakesinapplicationofaccountingprinciplesoversightormisuseoffactsCorrectionstreatedaspriorperiodadjustments

AdjustmenttobeginningbalanceofretainedearningsPriorPeriodAdjustmentsSO6Identifytheitemsreportedinaretainedearningsstatement.BeforeissuingthereportfortheyearendedDecember31,2007,youdiscovera$50,000error(netoftax)thatcaused2006inventorytobeoverstated(overstatedinventorycausedCOGStobelowerandthusnetincometobehigherin2006).WouldthisdiscoveryhaveanyimpactonthereportingoftheStatementofRetainedEarningsfor2007?PriorPeriodAdjustmentsSO6Identifytheitemsreportedinaretainedearningsstatement.RetainedEarningsStatementSO6Identifytheitemsreportedinaretainedearningsstatement.RetainedEarningsStatementThecompanypreparesthestatementfromtheRetainedEarningsaccount.Illustration12-24SO6Identifytheitemsreportedinaretainedearningsstatement.Allbutoneofthefollowingisreportedinaretainedearningsstatement.Theexceptionis:incomeandnetloss.somedisposalsoftreasurystockbelowcost.salesoftreasurystockabovecost.QuestionRetainedEarningsStatementSO6Identifytheitems