Unformatted text preview: The primary objectives in accounting for the issuance of common stock are to (a) identify the specific sources of paid-in capital and (b) maintain the distinction between paid-in capital and retained earnings. Treasury stock is a corporation’s own stock that has been issued, fully paid for, and reacquired but not retired. Preferred stock has contractual claims that give it priority over common stock. A cumulative dividend provides that preferred stockholders must be paid both current and prior year dividends before common stockholders receive any dividends. Preferred dividends not declared in a given period are called dividends in arrears. Capital stock consists of preferred and common stock. Additional paid-in capital includes the excess of amounts paid in over par or stated value and paid-in capital from treasury stock....
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- Spring '09