Fundamental-Accounting-Principles-(13)

AccountingforCorporationsChapter13PowerPointEditor:BethKane,MBA,CPACopyright©2015McGraw-HillEducation.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGraw-HillEducation.13-C1:CharacteristicsofCorporations213-3PrivatelyHeldPubliclyHeldOwnershipcanbeCorporateFormofOrganizationExistenceisseparatefromownersAnentitycreatedbylawHasrightsandprivilegesC1313-4CharacteristicsofCorporationsAdvantagesSeparatelegalentityLimitedliabilityofstockholdersTransferableownershiprightsContinuouslifeLackofmutualagencyforstockholdersEaseofcapitalaccumulationDisadvantagesGovernmentalregulationCorporatetaxationC1413-5CorporateOrganizationandManagementC1Corporategovernanceisthesystembywhichcompaniesaredirectedandcontrolled.BoardofDirectorsStockholdersPresident,VicePresident,andotherOfficersEmployeesoftheCorporation513-6CorporateOrganizationChartSecretaryVicePresidentFinanceVicePresidentProductionVicePresidentMarketingPresidentBoardofDirectorsStockholdersUltimatecontrolSelectedbyavoteofthestockholdersOverallresponsibilityformanagingthecompanyCorporateOrganizationandManagementC1Stockholdersusuallymeetonceayear613-7RightsofStockholdersVoteatstockholders’meetings(orregisterproxyvoteselectronically)SellstockPurchaseadditionalsharesofstockReceivedividends,ifanyShareequallyinanyassetsremainingaftercreditorsarepaidinaliquidationC1713-8Eachunitofownershipiscalledashareofstock.Astockcertificateservesasproofthatastockholderhaspurchasedshares.StockCertificatesandTransferWhenthestockissold,thestockholdersignsatransferendorsementonthebackofthestockcertificate.C1813-9Stockholders'EquityCommonStock,parvalue$0.01;authorized250,000,000shares;issuedandoutstanding92,556,295shares$925,563BasicsofCapitalStockTotalamountofstockthatacorporation’scharterauthorizesittosell.Totalamountofstockthathasbeenissuedorsoldtostockholders.C1913-10Parvalueisanarbitraryamountassignedtoeachshareofstockwhenitisauthorized.Marketpriceistheamountthateachshareofstockwillsellforinthemarket.BasicsofCapitalStockClassesofStockParValueNo-ParValueStatedValueC11013-P1:CommonStock1113-12ParValueStockOnJune5,DillonSnowboard’s,Inc.issued30,000sharesof$10parvaluestockfor$12pershare.Let’srecordthistransaction.IssuingParValueStockJune5Cash360,000CommonStock,$10parvalue300,000Paid-inCapitalinExcessofParValue,Common60,000Issued30,000sharesofcommonstock.P11213-13Stockholders'EquitywithCommonStockStockholders'EquityCommonStock-$10parvalue;50,000sharesauthorized;30,000sharesissuedandoutstanding300,000$Paid-InCapitalinExcessofPar60,000Retainedearnings65,000Totalstockholders'equity425,000$IssuingParValueStockP11313-14IssuingStockforNoncashAssetsParValueStockOnJune10,4,000sharesof$20parvaluestockforlandvaluedat$105,000.Let’srecordthistransaction.DrCrJune10Land105,000CommonStock,$2parvalue80,000Paid-inCapitalinExcess25,000ofParValue,CommonExchanged100,000commonsharesforland.P114Preparejournalentriestorecordthefollowingfourseparateissuancesofstock.1)Acorporationissued80sharesof$5parvaluecommonstockfor$700cash.2)Acorporationissued40sharesofno-parcommonstocktoitspromotersinexchangefortheirefforts,estimatedtobeworth$800.Thestockhasa$1persharestatedvalue.3)Acorporationissued40sharesofno-parcommonstockinexchangeforland,estimatedtobeworth$800.Thestockhasnostatedvalue.4)Acorporationissued20sharesof$30parvaluepreferredstockfor$900cash.DebitCredit1)Cash700CommonStock,$5parvalue(80sharesx$5)400Paid-inCapitalinexcessofparvalue,Commonstock3002)Organizationexpenses800CommonStock,$1statedvalue(40sharesx$1)40Paid-inCapitalinexcessofstatedvalue,Commonstock7603)Land800CommonStock,No-parvalue8004)Cash900PreferredStock,$30parvalue(20sharesx$30)600Paid-inCapitalinexcessofparvalue,Preferredstock300GeneralJournalNEED-TO-KNOWP11513-P2:Dividends1613-17DividendsStockholdersCashDividendsCorporationTopayacashdividend,thecorporationmusthave:1.Asufficientbalanceinretainedearnings;and2.Thecashnecessarytopaythedividend.75%22%0%20%40%60%80%100%CommonPreferred%ofCorporationsPayingDivendsRegularcashdividendsprovideareturntoinvestorsandalmostalwaysaffectthestock’smarketvalue.P21713-18AccountingforCashDividendsThreeImportantDatesDateofDeclarationRecordliabilityfordividend.DateofRecordNoentryrequired.DateofPaymentRecordpaymentofcashtostockholders.P21813-19DateofDeclarationRecordliabilityfordividend.DrCrJan.9RetainedEarnings5,000CommonDividendPayable5,000Declared$1persharecashdividend.AccountingforCashDividendsOnJanuary9,a$1persharecashdividendisdeclaredonZ-Tech,Inc.’s5,000commonsharesoutstanding.ThedividendwillbepaidonFebruary1tostockholdersofrecordonJanuary22.P21913-20NoentryrequiredonJanuary22,thedateofrecord.DrCrFeb.1CommonDividendsPayable5,000Cash5,000Paid$1persharecashdividend.DateofPaymentRecordpaymentofcashtostockholders.AccountingforCashDividendsOnJanuary9,a$1persharecashdividendisdeclaredonZ-Tech,Inc.’s5,000commonsharesoutstanding.ThedividendwillbepaidonFebruary1tostockholdersofrecordonJanuary22.P22013-21Stockholders'Equity5,000sharesauthorizedandoutstanding50,000$(6,000)44,000$Re