Notes for lecture on Chapter 11

Notes for lecture on Chapter 11 - Chapter 11: Shareholders...

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Chapter 11: Shareholder’s Equity I. Shareholders’ Equity Section of the Balance Sheet Shareholders’ Equity Paid-In Capital Capital Stock 8% Preferred Stock, $100 par value, 10,000 shares authorized, 4,000 shares Issued and outstanding $ 400,000 Common Stock, $3 par value, 600,000 shares authorized, 300,000 shares Issued, and 285,000 shares outstanding 900,000 Total Capital Stock $1,300,000 Additional Paid In Capital In Excess of Par Value – Preferred Stock $ 97,000 In Excess of Par Value – Common Stock 380,000 Total Additional Paid In Capital 477,000 Total Paid In Capital $1,777,000 Retained Earnings 610,000 Total Paid In Capital and Retained Earnings $2,387,000 Less: Treasury Stock-Common Stock (15,000 shares at cost) (50,000) Total Shareholders’ Equity $2,337,000 II. Vocabulary A. Authorized Shares: Amount of stock authorized to sell (in charter); must obtain consent of state to amend Charter before corporation can sell (issue) more shares Disclosed in the Balance Sheet; No formal journal entry B. Issued Shares: Shares sold directly to investors or indirectly sold through investments firms (customary for publically held corporations) C. 1. Par Value Assigned Value per share in Charter; No relationship to market value of stock (very small value) 2. No Par Value – Common today No value given in charter; Board of Directors gives a “stated” value to no par value stock III. Common Stock A. Paid in Capital (“Contributed”)
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Notes for lecture on Chapter 11 - Chapter 11: Shareholders...

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