handout for class 3

handout for class 3 - b. Dates 8. Dividend preference (do...

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Handout #3 for Bus321-Intermediate Accounting II Professor: Yasheng Chen Notes for BUS321 Class 3: Shareholders’ Equity Learning objectives: 1. Identify common shares and various types of preferred shares. 2. Remember journal entries to record issuance and repurchase of shares and dividends distribution. a. Issuance, including subscription b. Repurchase / retire shares c. Cash dividends and stock dividends d. Effect of dividend preference 3. Indicate how shareholders’ equity is presented on financial statements. Key learning points: 1 Components of shareholders’ equity 2. Inherent rights of share holders a. b. c. 3. Major types of shares 4. Features of preferred shares a. Cumulative b. Participating 5. Journal entries for share issuance a. Issuance costs b. Subscription basis Dr. Cr. c. Defaulted Subscription: refund, partial issuance, forfeit 6. Share repurchase a. With loss 1
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Handout #3 for Bus321-Intermediate Accounting II Professor: Yasheng Chen b. Share repurchase with gain 7. Dividends distribution a. Types of dividends
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Unformatted text preview: b. Dates 8. Dividend preference (do the following exercise) Exercise: Calculate the dividends per share for cumulative and fully participating preferred shares and common shares Exercise: P15-10 (b), page 1010 Assumption: Preferred shares are cumulative and fully participating Dividends Amount Dividends per share Dividends in Arrears Year Paid-out Preferred Common Preferred Common Preferred 201 $8,000 $13,000.00 $0.00 $5.20 $0.00 $4,500.0 2011 $24,000 $22,000.00 $4,000.00 $8.80 $0.27 2012 $60,000 $35,625.00 $21,375.0 $14.25 $1.43 2013 $126,000 $110,000.00 $66,000.0 $44.00 $4.40 Prescribe dividend rate for preferred shares = $7/($250,000/2,500)= 7% Carrying value of preferred shares = $250,000 Carrying value of common shares = $150,000 Total value of preferred and common shares = $400,000 2008 dividend rate 14.25% = $57,000/$400,000 2009 dividend rate 44.00% = $176,000/$400,000 9. Stock split 2...
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handout for class 3 - b. Dates 8. Dividend preference (do...

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