MGMT 1B Chapter 11

Issuing par value stocks

Dr Cash

Cr Common Stock

issuing stocks at premium

Dr Cash

Cr paid in capital excess

Cr Common Stock

Stockholder’s equity consists of

1. paid in capital

2. Retained earnings

Authorized stock

Number of shares that a corporation is allowed to sell

3 dates for cash dividens

1. date of declaration

2. date of record

3. date of payment

difference in recording small stock dividends and large stock dividends

small: capitalize retained earnes for amnount of market value

large: capitalize retained earnings for par or stated value

treasury stock account and equity account

contra-accounts

Growth stock

low dividend yield, expected stock price increases

income stock

large regular cash dividens

Earnings per share ratio

(Net income- Preferred dividends) / weighted average common shares outstanding

price to earnings ratio

market value per share / earnings per share

dividend yield ratio

annual cash dividends/ market value per share

restricted retained earnings

statutory and contractional restrictions

ex: legal state limit or loan agreement

appropriated retained earnings

voluntary transfer of amounts from retained earnings to appropriated retained earnings to inform users of special activities.