Chapter11highlights - Chapter 11 highlights Chapter 11...

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Chapter 11 highlights Chapter 11 Highlights The Equity Section of the balance sheet = equity accounts increase with Credits and Decrease with Debits. From the balance sheet : Stockholder’s Equity Contributed Capital Preferred stock, 5% (par value $100; authorized 5,000 shares, issued 2,000 shares of which 80 shares are held as treasury stock) Common Stock (par value $1; authorized 20,000 shares, issued and outstanding 8.000 shares) Contributed Capital in Excess of Par, preferred stock Contributed Capital in Excess of Par, commons stock Total Contributed Capital Retained Earnings Total Contributed Capital and Retained Earnings Less cost of preferred treasury stock held (80 shares) Total Stockholders Equity Total Liabilities and Stockholder’s Equity Issuing Stock Provides a source of financing for the company Giving up ownership/ equity of the company Contributed Capital Common Stock o Voting rights o Dividends (not guaranteed) Distribution of profits o Distribution of corporate assets upon liquidation o Residual equity – because preferred stockholders get first dividends and distribution of assets – common stockholders get what is left
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Chapter 11 highlights Preferred Stock o Like a bond o Par plus a stated dividend 10% which is 10% x Par Value Dividends are fixed Sometimes dividends are cumulative Not as volatile in market price as common stock o NO Voting o Does not dilute common stockholder’s control of company o Convertible Can exchange for common stock o Callable Required to sell back to company if called Charter – Articles of Incorporation Authorized o # of shares authorized to issue – noted in charter o issued - # of shares that have been sold at least once o outstanding - # of shares that are outside of the company in the hands of the stockholders stock can be issued without being outstanding – i.e. treasury stock o unissued – never sold but authorized
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Chapter11highlights - Chapter 11 highlights Chapter 11...

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