Chapter 11 - 11-111-1Corporations Organization Stock Transactions and Dividends11Student Version11-211-2Describe the natureof the corporate form of

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Unformatted text preview: 11-111-1Corporations: Organization, Stock Transactions, and Dividends11Student Version11-211-2Describe the natureof the corporate form of organization.111-211-311-3•A corporation has separate legal existence from its owners.•A corporation has transferable units of ownership.•A corporation has limited stockholders’ liability.1Characteristics of a Corporation11-411-4Costs may be incurred in organizing a corporation. The recording of a corporation’s organizing costs of $8,500 on January 5 is shown below:111-511-5Describe the two main sources of stockholders’ equity.211-511-611-6The two sources of capital are:1.Capital contributed to the corporation by the stockholders, called paid-in capitalorcontributed capital.1.Net income retained in the business, called retained earnings.211-711-7Stockholders’ Equity Section of a Corporate Balance SheetStockholders’ EquityPaid-in capital:Common stock$330,000Retained earnings80,000Total stockholders’ equity$410,000If there is only one class of stock, the account is entitled Common Stockor Capital Stock.211-811-8Describe and illustrate the characteristics of stock, classes of stock, and entries for issuing stock.311-811-911-9Characteristics of StockThe number of shares of stock that a corporation is authorizedto issue is stated in the charter. A corporation may reacquire some of the stock that has been issued. The stock remaining in the hands of stockholders is then called outstanding stock.311-1011-10Shares of stock are often assigned a monetary amount, called par. Corporations may issue stock certificates to stockholders to document their ownership. Some corporations have stopped issuing stock certificates except on special request....
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This note was uploaded on 01/31/2011 for the course BUS 101 taught by Professor Pernia during the Spring '10 term at Essex County College.

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Chapter 11 - 11-111-1Corporations Organization Stock Transactions and Dividends11Student Version11-211-2Describe the natureof the corporate form of

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