Chapter 15

• preference to dividends
• preference to liquidation assets
• convertible to common stock
• callable at the corp's option
• no right to vote

% preferred stock, par value, # of shares authorized, # of shares issued and # of outstanding shares

common stock

Add'l paid-in capital- Pref

Add'l paid-in capital- Com

Add'l paid-in capital- Treasury

• Retained Earnings
• less: Treasury stock (at cost)

Total= Stockholder's Equity

Common stock purchased by the company with the intent of reselling.

If no intent of reselling, then it is retired

• Dbt: Treasury Stock (at cost!)
• Crd: Cash

• Dbt: Cash
• Cdt: Treasury Stock
• Cdt: add'l paid-in cap- T/S

Dividends do NOT accumulate if the company misses a year

The stockholder will only get the stated % on the preferred stock

Dividends are owed for years that they are not distributed, only up to the stated % on the stock

Dividends are owed for the current year as well, only up to the stated %

Dividends are NOT owed for years they are not distributed

They are due at least the stated % and most likely the "participating %"

• Total declared dividends
• ____________________

P/S acct + C/S acct

The participating percentage is then multiplied by the amt in the P/S acct

Dividends are owed for years they were not distributed.

BEFORE determining the participating %, deduct dividends in arrears from total dividends

issuance of own stock to shareholders

aka "capitalizing the earnings of the company"

The FMV of the stock dividend is taken out of retained earnings

Only par value is deducted from retained earnings

• Dbt: Retained Earnings
• Cdt: Common stock dividend distributable
• Cdt: Additional paid-in capital

• Dbt: Common stock div. distrib
• Cdt: Common stock

to reduce the market value of shares and increase the number of people who hold the stock

There is NO journal entry

Par value decreases and number of shares increases

underwriting, accounting fees, legal fees, printing costs, taxes

Contributed Capital (C/S, P/S, Add'l pd-in capital)

Retained Earnings

Enables a stockholder to share proportionately in any new issues of stock of the same class