Public Most issues of stock to the public are cash transactions Stock Issuance

Public most issues of stock to the public are cash

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Public
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Most issues of stock to the public are cash transactions. Stock Issuance Whyville Corporation issued 200,000 shares of $1 par value common stock for $25 per share during it’s IPO. 11-16
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Stock Exchanged between Investors Transactions between two investors do not affect the corporation’s accounting records. I’d like to sell 100 shares of National Beverage stock. I’d like to buy 100 shares of National Beverage stock. 11-17
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Repurchase of Stock A corporation repurchases its stock to: Distribute excess cash to stockholders. Send a signal that the company believes its stock is worth acquiring. Obtain shares to reissue for the purchase of other companies. Obtain shares to reissue to employees as part of stock option plans.
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Stock Used to Compensate Employees Employees pay packages can include stock options Gives the employees the option to acquire company stock at a predetermined price If the employees work hard and meet the corporation’s goals the stock price will increase. Employees can then exercise their option to acquire stock at the lower predetermined price and sell it at the higher price for a profit.
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No voting or dividend rights Contra equity account When stock is reacquired, the corporation records the treasury stock at cost . Treasury stock is not an asset. Repurchase of Stock 11-21
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Authorization, Issuance, and Repurchase of Stock
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Repurchase of Stock Whyville Corporation reaquired 5,000 shares of its common stock at $20 per share. 11-25
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Reissuance of Treasury Stock Whyville Corporation reissued 1,000 shares of the treasury stock (originally purchased for $20) at $27 per share. 11-26 No profit or loss is recognized on treasury stock transactions.
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In-Class 01
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Learning Objective 11-3 Explain and analyze cash dividends, stock dividends, and stock split transactions.
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Dividends on Common Stock Declared by board of directors. Not legally required. Creates liability at declaration. Requires sufficient Retained Earnings and Cash. 11-29
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If I loan your company $1,000,000, I will want you to restrict your retained earnings to limit dividend payments. Restrictions on Retained Earnings Loan agreements can include restrictions on paying dividends below a certain amount of retained earnings. Loan agreements can include restrictions on paying dividends below a certain amount of retained earnings. 11-30
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Dividends Dates 11-31 1. Declaration Date 2. Date of Record 3. Date of Payment 4. Year End
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Cash Dividends On April 1, 2018, Yogi Corp. BOD declared a cash dividend of $0.50 per share on 600,000 outstanding common stock shares. The dividend will be paid on May 31, 2018, to common stock shareholders of record on May 26, 2018.
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