Mgmt 200 Fall 2008 Chap 11 Stockholders' Equity

Mgmt 200 Fall 2008 Chap 11 Stockholders' Equity -...

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Stockholders’ Equity Chapter 11
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Stockholders’ Equity Corporate form of organization Benefits of Corporations Access to large amounts of capital Limited liability Liquidity Risk sharing Sources of stockholders’ equity Contributed capital Retained earnings
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Stockholders’ Equity Accounts Common stock, at par Preferred stock Additional Paid-in Capital (APIC) Retained Earnings Other stockholders’ equity Treasury stock (A contra-equity account)
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Contributed Capital Authorized shares Issued shares Treasury stock Outstanding shares Voting rights, dividend rights Market Capitalization Shares outstanding x share price Earnings per share Net income / Average common shares outstanding
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Issuing common shares Par value Initial Public Offering (IPO) Cash 25,000,000 Common stock 100,000 Capital in excess of par 24,900,000 Issue of 1,000,000 shares, $0.10 par value, at $25 per share.
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Exercise 11-3: Stock Issuances Horace Company had the following transactions during 2008, its first year of business: a. Issued 5,000 shares of $5 par common stock for cash at $15 per share. b. Issued 7,000 shares of common stock on May 1 to acquire a factory building from Barkley Company. Barkley had acquired the building in 2004 at a price of $150,000. Horace estimated that the building was worth $175,000 on May 1, 2008. c. Issued 2,000 shares of stock on June 1 to acquire a patent. The accountant has been unable to estimate the value of the patent but has determined that Horace’s common stock was selling at $25 per share on June 1. Required 1. Record an entry for each of the transactions. 2. Determine the balance sheet amounts for common stock and additional paid-in capital.
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Repurchase of shares: Treasury shares, at cost 800,000 Cash 800,000 Repurchase of 20,000 shares at $40 per share. Reissue of treasury shares:
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This note was uploaded on 01/31/2011 for the course MGMT 200 taught by Professor Greigg during the Fall '08 term at Purdue University-West Lafayette.

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Mgmt 200 Fall 2008 Chap 11 Stockholders' Equity -...

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