College Accounting: A Practical Approach, 9/e by SlaterCorporations:
Learning Objective 1
preferred and common stock.
Learning Unit 19-1
Learning Unit 19-1
Number of shares of preferred stock outstanding
=
Number of shares of common stock outstanding
=
Learning Unit 19-1
authorized, issued, and outstanding $250,000
Paid-in capital in excess of par – common 110,000
Total paid-in capital $360,000
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Learning Unit 19-1
3,000 shares cumulative and nonparticipating,
2,000 shares issued and outstanding $200,000
Paid-in capital in excess of par – preferred 10,000
Total paid-in capital by preferred stockholders $210,000
Common stock, $50 par value, authorized 12,000
shares, 10,000 shares issued and outstanding 500,000
Paid-in capital in excess of par value – common 20,000
Total paid-in capital by common stockholders 520,000
Total paid-in capital $730,000
Learning Unit 19-1
Dividends in arrears 14,000 (220,000)
Equity allocated to common stock $674,000
Ryan Corporation
Stockholders’ Equity
$206,000 + $14,000 ÷ 2,000 = $110
$894,000 – 220,000 ÷ 10,000 = $67.40
Learning Objective 2
and a stock dividend.
Learning Unit 19-2
Learning Unit 19-2
5,000 shares issued and outstanding.
Accounts Affected Category Rules
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Learning Unit 19-2
corporation’s own stock to shareholders.
It is a transfer of Retained
Earnings to Paid-in Capital.
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Learning Unit 19-2
value common stock outstanding, declares a 10%
stock dividend when the shares are trading at $30.
How many shares are issued in the dividend?
10,000 × 10% = 1,000 shares
Learning Unit 19-2
Declaration of a 10% common stock dividend
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Learning Unit 19-2
reduce the par or stated value in proportion.
6
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Learning Objective 3
Journalizing the purchase
4
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Learning Unit 19-3
own shares of issued stock.
Treasury stock has a debit balance.
It is not an asset.
The corporation buys the shares on the
stock market, or directly from shareholders.
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Learning Unit 19-3
for issuance in stock options plans, etc.
Dividends are not paid on the treasury stock.
It is not outstanding.
Learning Unit 19-3
$10 par value common stock at $12
per share (5,000 shares are outstanding).
What is the journal entry?
Treasury Stock – Common 12,000
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Learning Unit 19-3
or below the cost of reacquiring the stock.
Excess of sales price over cost is credited
to Paid-in Capital from Treasury Stock.
Assume that on July 8, Ashly Corporation
sells 100 shares of treasury stock at $15.
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Learning Unit 19-3
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Learning Objective 4
Preparing a statement
of retained earnings.
Learning Unit 19-4 (Appropriations of Retained Earnings)
Retained earnings appropriation is
that is not available for dividends.
No actual cash “set asides” are involved
in the appropriation of retained earnings.
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Learning Unit 19-4 (Appropriations of Retained Earnings)
It can be noted in a memo entry or an actual
journal entry that debits Retained Earnings
and credits Appropriation (for a purpose).
The restriction can be contractual or voluntary.
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Learning Unit 19-4 (Appropriations of Retained Earnings)
Ralston Company
Retained earnings, Jan. 1, 20x2 $350,000
Less: Prior period adjustment:
Retained earnings, Jan, 20x2, corrected $338,000
Add: Net income for 20x2 40,000
Total $378,000
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End of Chapter 19