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Ch14-Test1 - Ch.14 13 Conditions for declaring dividends 2...

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Ch.14 13. Conditions for declaring dividends, 2 conditions (p.692) Large stock dividends : dividends that is greater than 25% of the outstanding stock. Small stock dividends : dividends that is less than 25% of the outstanding stock. Small stock dividends are recorded at the market value Retained Earnings XX Common Stock XX Paid-in Capital in Excess of Par-common XX 14. Effect on assets, liabilities, and stockholder’s equity of declaring an issuing stock dividends. (P.691) [Unlike cash dividends, stock dividends do not give any assets to the stockholders .] * Affect only STOCKHOLERS’ EQUITY accounts (including Retained Earnings and Common Stock) * Stock dividends DECREASE Retained Earnings , INCREASE Common Stock and Paid-in Capital . * Have NO EFFECT on total STOCKHOLDERS’ EQUITY *Have NO EFFECT on ASSETS or LIABILITIES 15. Effect of stock dividends and splits on the number of shares outstanding [p.694 14-5] Cash dividend: Common Stock(x), Paid-in cap.Excess(x), Retained Ear.(Dec) Stockholders’(Dec) Stock dividend: Common Stock(Inc), Paid-in cap.Ex.(Inc), Retained Ear.(Dec) Stockholders’(X) Stock Split : Common Stock(x), Paid-in cap.Excess(x), Retained Ear.(X) Stockholders’(X) 16. Definition of treasury stock (what kind of account treasury stock is) Treasury Stock is issued stock that has been later reacquired by the issuing corporation . Purchase of Treasury Stock is recorded with a debit to Treasury Stock, a contra equity account. -Treasury Stock XX(Purchase price, not par value-h ) Cash XX -The purchase of Treasury Stock does not reduce the number of shares of issued, only the number of shares outstanding. -Not outstanding(z %e b ): it does not vote or receive cash dividends. -Treasury Stock is reported on the Balance Sheet just below Retained Earnings; it is deducted from total stockholder’s equity.
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The Sale of Treasury Stock
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