Stock Splits ch 9

Stock Splits ch 9 - Treasury Stock – issued stock that...

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Stock Splits – a distribution of additional shares of stock to stockholders according to their percent ownership market value of each share of stock has gone up too high and the stock isn’t affordable to a majority of people – they want to make each share cheaper for people so the corporation “splits” the par value of its stock 100 shares for $10 par common stock and a 2-for-1 split… 200 shares outstanding with a par value of $5 Neptune company has the following equity section before 2-for-1 stock split Information before the split 100,000 shares authorized 25,000 shares issued and outstanding 250,000 par value $10 information after the split $5 par value 50,000 shares outstanding and issued 200,00 shares authorized no journal entry is made for a stock split Modified version of Exercise 11-6
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Unformatted text preview: Treasury Stock – issued stock that has been subsequently reacquired by the corporation Why would a company buy its own stock? The stock is selling for a low price is a good buy To avoid a hostile takeover – avoid someone from buying too much and taking over – so that the corporation can keep ownership of the company To fund employee stock options/ profit sharing or bonus plans To maintain a strong market for its sock or to stimulate trading Treasury stock is shown as a reduction in total stockholders’ equity on balance sheet Subtract from issued stock to get outstanding stock Purchasing treasury stock On Aug 1, 2009 Saturn Company buys 100 shares of its stock for $8 per share Journal entry to record the purchase...
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