Lecture Notes - Assign 8

2 issued the number of shares actually issued to the

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2. Issued – the number of shares actually issued to the shareholders. 3. Outstanding – the number of shares still being held by shareholders. Outstanding shares = issued – treasury stock Treasury stock are shares originally issued that have been repurchased by the company. Reasons: o Stop decline of market price per share o Death/retirement o To give to employees at a later date Issuance of Shares Credit Stock at par value. If market value > par value, credit Paid-in-Capital in Excess of Par for difference. Debit the following accounts, as necessary: o Cash o Organizational Expenses o Buildings, Land, or Equipment If mortgage, credit the Notes Payable. Dividends Cash – corporation gives owners cash negatives – uses corporation’s cash, lowers total asset value and equity
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Stock – corporation gives owners stock positives – conserves cash, reduces market price of stock (more attractive to investors), and redistributes the equity section. Dividends are paid on outstanding shares only (issued shares – treasury stock). Dividend per share = total dividend/# of shares Order of Dividend Payment : 1. Preferred stock e.g. 6% $100par preferred stock: dividend 6% * $100 = $6 2. Common stock Example: Total dividend of $50,000.
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