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Unformatted text preview: M351 Notes, Class 13: Stockholders’ Equity, pages 725-740 Today’s topics: • Properties of equity claims • Stock issuances • Stock repurchases – treasury stock • Preferred stock A. Stockholders share proportionally: 1. in profits and losses 2. in management (right to vote for the board) 3. in assets in liquidation 4. in new issues of stock of the same class (preemptive right). B. The class of stock that represents the basic ownership interest in a company is called common stock. That class of stock bears the ultimate risk of loss and receives the benefit of corporate success. 1. Usually controls management through election of the board of directors. C. Stockholders’ equity usually consists of: 1. capital stock 2. additional paid-in capital (sometimes paid-in capital in excess par) 3. retained earnings (earned capital) Capital stock plus additional paid-in capital is often called contributed capital . D. Stock can be: 1. Par value stock 2. No par stock 1 E. Assume a corporation issues (sells) 10,000 shares of $5 par common stock for $16 per share. The company would make the following entry:...
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- Spring '08
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