F1M3 - Stockholders Equity

Capital Stock

Shares Issued x Par Value Per Share

Retained Earnings

Accumulated Profit to date to be reinvested into the business

Stockholders Equity On BS

RE
AOCI
Less: Cost of Shares in Treasury
Total Capital Equity
Non-Controlling Interest
Total Equity

Capital Stock

AMT of capital retained for corps for protection of creditors

• par or stated value

• anything over = APIC

Common Stock

= Basic Ownership in a company

• most risk, highest upside

Rights of CS

1. Right to Vote

2. Share In Earnings

3. Share assets in Liquidation after creditors + PS

Preemptive Right

= maintian voting strength

Common Shareholders Equity

Total SE

Less: PS Outstanding
Less: Cumulative Preferred Divs in Arrears

PS

1. Dividends

2. Liquidation

3. No Voting Rights

Cumulative PS

= if divs are not paid in one years, they accumulate

Participating Preferred Stock

Gets regular preferred dividend

Also shares in extra dividends with common stockholders

May get extra in liquidation after others are paid

APIC

= Shares Issued x Contribuited Capital - Par Value

Retained Earnings does not include

1. TS

2. AOCI

RE Formula

NI
- Divs Declared

+- PY adjustments

+- ACC Changes Retrospectively

How can RE be classified?

A. Appropriated
B.Unappropriated

Treasury Stock

Issued, but bought Back

• not entitled to vote/receive divs

Cost Method

= No G/L unless resold

Dr. TS @Cost

Cr. Cash

• never on IS

How to Calculate G/L in Cost Method?

= Reissue - Repurchase Cost

Where do Losses Go?

First APIC TS, then Excess RE

Cost Method Issue Date Journal Entry

Dr. Cash

Cr. APIC

Cr. Common Stock

Buy Back Above Issue Price

Dr. Treasury Stock
Cr. Cash

Reissue Above Cost

Dr. Cash

Cr. Treasury Stock

Cr. APIC TS

Reissue Below Cost

Dr. Cash

Dr. APIC TS
Dr. RE

Cr. TS

Legal/ PV Method

= reduce AMTs of Par and APIC

How is G/L Calulated PV Method

= OG - Repurchase

Steps

1. Calculate G/L

2. Reverse OG entry for shares Repurchased

3. Cr. Cash for the price paid

Issue Date

Dr. Cash

Cr. Common Stock

Cr. APIC - CS

Buyback Above Issue Price - PV Method

Dr. Treasury Stock

Dr. APIC - CS

Dr. Retained Earnings

Cr. Cash

Buyback Below Issue Price - PV Method

Dr. Treasury Stock

Dr. APIC - CS

Cr. Cash

Cr. APIC - TS

Reissue Shares - PV Method

Dr. Cash

Cr. TS

Cr. APIC CS

Retirement of TS - Cost Method

Dr. CS

Dr. APIC

Dr. RE

CR. TS

Retirement of TS - PV Method

Dr. Common Stock

Cr. Treasury Stock

Donated Stock

Dr. Cash (At Sales Price)

Dr. APIC (if SP< FMV)

Cr. APIC (if SP > OG FMV)

Cr. Donated Treasury Stokc (at Book Value or OG FMV)