Ch.11 - 11-1Click to edit Master subtitle styleChapter...

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Unformatted text preview: 11-1Click to edit Master subtitle styleChapter 11Reporting andInterpretingStockholders Equity11-2Learning Objective 1Explain the role of stock in financing a corporation.11-3Advantages of CorporationsnCan raise large amounts of moneynRelatively simple to become an ownernEasy to transfer ownershipnProvides limited liability11-4Because a corporation is a separatelegal entity, it can . . .Corporate OwnershipnOwn AssetsnIncur LiabilitiesnSue and be suednEnter into Contracts11-5Stockholder Benefits/RightsnVoting rightsnRight to receive dividends declarednResidual claimsqUpon liquidation, right to assets remaining after creditors paidnPreemptive rightsqFirst chance to buy newly issued shares of stock11-6Vice President(Production)Vice President(Marketing)Vice President(Finance)Vice President(Personnel)PresidentBoard of DirectorsInternal (managers)andExternal (non-managers)Stockholders(Owners of voting shares)Elected byshareholdersAppointedby directorsCorporate Ownership11-7Equity Versus Debt FinancingAdvantages of equity Equity does not have to be repaid. Dividends are optional.Advantages of debtInterest on debt is tax deductible. Debt does not change stockholder control.Advantages of equity and debt financing.11-8Learning Objective 2Explain and analyze common stock transactions.11-9Two primary sources of stockholders equityContributed capitalRetained earnings CommonStockAdditional paid-in capitalCommon Stock Transactions11-10Authorization, Issuance, and RepurchaseThe maximum number of shares of capital stock that can be sold to the public. AuthorizedSharesAuthorized shares are specified in the corporate charter.11-11AuthorizedSharesIssued sharesare authorized shares of stock that have been sold.Unissued sharesare authorized shares of stock that never have been sold.Authorization, Issuance, and Repurchase11-12AuthorizedSharesUnissuedSharesTreasurySharesOutstandingSharesIssuedSharesTreasury sharesare issued shares that have been reacquired by the corporation.Outstanding sharesare issued shares that are owned by stockholders.Authorization, Issuance, and Repurchase11-13Excerpt from Papa Johns Balance Sheet showing Stockholders Equity at Dec. 30, 2007.(Dollar amounts in thousands).Stockholders' EquityContributed CapitalCommon stock. Par Value $0.01 per shareAuthorized: 50,000,000 Shares Issued: 34,866,000 Shares349$ Additional paid-in capital208,598Preferred Stock. Par Value $0.01 per shareAuthorized: 5,000,000; none outstanding-208,947Accumulated Other Comprehensive Income156Retained earnings96,963306,066Treasury Stock, at cost: 6,089,000 Common Shares(179,163)Total stockholders' equity126,903$ Common Stock Transactions11-14All corporations are required to issuecommon stock at incorporation....
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This note was uploaded on 08/15/2011 for the course ACIS 2115 taught by Professor Jayardley during the Spring '07 term at Virginia Tech.

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Ch.11 - 11-1Click to edit Master subtitle styleChapter...

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