ACCT101-Handout11

ACCT101-Handout11 - Acct 101 L12 L13 L16 Handout#11 Accounting for Stockholders Equity Debt and equity Debt(Bond Equity Priority in the case of

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Acct 101 L12, L13, L16 Handout #11 1 Accounting for Stockholders’ Equity Debt and equity Debt (Bond) Equity Priority in the case of liquidation Secured debts > Unsecured debts > Preferred shares > Common shares Type Secured/ unsecured Callable/ non- callable Convertible/ nonconvertible … etc. Preferred Common Voting rights No No Yes Residual claim No No Yes Related balance sheet accounts Bonds payable Discount on B/P (or Premium on B/P) Preferred stock Paid-in capital (preferred) Common stock Paid-in capital (common) Cash outflows Interests (fixed rate, periodic) Cash dividends (usually fixed rate) Non-cumulative Cumulative Cash dividends (variable rate) Cash dividends, stock dividends, and stock split Common stock (20,000 shares, par $15) $300,000 Paid-in capital 150,000 Retained earnings 230,000 Total Stockholders’ equity $680,000 Cash dividend ($7.5 per share) Stock dividend (50%) Stock split (1.5-for-1)
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Acct 101 L12, L13, L16 Handout #11 2 The following is from the section of Stockholders’ equity on ABC Co.’s balance sheet on January 1, 2006. Preferred shares, $2.00 non-cumulative, $70 par, 100,000 shares
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This note was uploaded on 12/07/2009 for the course ACCT ACCT 101 taught by Professor H during the Fall '08 term at HKUST.

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ACCT101-Handout11 - Acct 101 L12 L13 L16 Handout#11 Accounting for Stockholders Equity Debt and equity Debt(Bond Equity Priority in the case of

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