Chapter Eleven Lecture Note

Chapter Eleven Lecture Note - Dividends payable 2 Date of...

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Chapter Eleven Lecture Note Why corporation? Limited liability. Why Delaware? Favorable state law for incorporation. Why ownership? Voice in management, dividends, capital gain, employee compensation. Shares: authorized, issued, outstanding, common stock, par value. Cash Common stock Capital in excess of par Treasury stock: 1. Repurchase: Treasury stock Cash 2.Sell again: Cash Treasury stock Capital in excess of par (Dr. or Cr. Depends on amount under or over cost) No gain or loss involved. Cash Dividend: 1. date of declaration: liability Retained earnings
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Unformatted text preview: Dividends payable 2. Date of record: no journal entries 3. Date of payment Dividends payable Cash Stock Dividends: large: more than 20-25% of currently outstanding shares Small: less than 20-25% Retained earnings Common Stock 2- for 1- Stock Split: no journal entries Preferred stock: no voting right, lower risk, fixed dividend rate, first priority (preference) Cumulative, dividend in arrears. EPS = net income / average number of common shares outstanding Dividend yield ration = dividend per share / market price per share...
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