山东财经大学 会计英语 第6章

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Deficit
Is a debit balance in retained earnings and is reported as a deduction in the stockholders' equity section of the statement of financial position.
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The Declaration Date...

Is the date the board of directors declares the cash dividend. Commits the corporation to a binding legal obligation that cannot be rescinded.
If Hydro-Slide, Inc., issues an additional 1,000 shares of the $1 par value common stock for cash at $5 per share, the entry is: Cash 5,000 Common Stock 1,000 Paid-in Capital in Excess of Par Value 4,000 Note: Paid-in Capital in Excess of Par Value can also be called Share Premium.
Dec 20
No Entry Necessary.
The Payment Date...
The date dividend checks are mailed. January 20 is the payment date for Media General. Jan 20 Dividends Payable 50,000 Cash 50,000
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Hydro-Slide, Inc. Statement of Financial Position (partial)
Stockholders' equity Paid-in capital Common stock $ 2,000 Paid-in capital in excess of par 4,000 Total paid-in capital $ 6,000 Retained earnings 27,000 Total stockholders' equity $33,000
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Retained earnings (earned capital) Earned capital held for future use in the business. other reserves
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11 2
Accounting for Common Stock Issues


The issue of common stock affects only paid-in capital accounts. When the issuance of common stock for cash is recorded, the par value of the shares is credited to common stock or share capital. The portion of the proceeds above or below par value is recorded in a separate paid-in capital account (share premium).
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Stockholders’ Equity Section of a Corporation’s Statement of Financial Position
Three Parts: – Paid-in (contributed) capital - Amount paid to corporation by stockholders in exchange for shares of ownership.
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Retained Earnings... * *



Is net income that is retained in the business. The balance in retained earnings is part of the stockholders' claim on the total assets of the corporation. Retained earnings does not represent a claim on any specific asset.
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Characteristics of a Corporation


Separate legal existence Limited liability of stockholders Transferable ownership rights Ability to acquire capital Continuous life Corporation management Government regulations Additional taxes
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Issuing Stock at Par
Hydro-Slide, Inc., issues 1,000 shares of $1 par value of common stock at par for cash.
Cash 1,000 Common Stock
1,000
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Issuing Stock Above Par
On December 1, 2007, the directors of Media General declare a $.50 per share cash dividend on 100,000 shares of $10 par value common stock. The dividend is $50,000 (100,000 x $.50).
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Cash Dividend

In many states, payment of dividends from legal capital is prohibited. Payment of dividends from paid-in capital in excess of par is legal in some states. Payment of dividends from retained earnings is legal in all states. Companies are frequently constrained by agreements with lenders to pay dividends only from retained earnings.
$540,000

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Cash Dividend*
Is a pro rata distribution of cash to stockholders. A corporation must have 3 things to pay cash dividends:

Retained earnings Adequate cash Declared dividends
Chapter 6 OWNERS’ EQUITY
Learning Objectives



1. Appreciate the advantages and disadvantages of the corporate form of organisation 2. Understand the differences between ordinary shares and preference shares 3. Describe the equity part in a company 4. Journalise the entries for issuing shares 5. Journalise the entries for the creation and reduction of the different types of reserves 6. Journalise the entries for cash dividends and share dividends 7. Journalise the entries for income tax expense in a company
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Corporate Organization Chart
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Stockholder Rights



Once chartered, the corporation sells stock . If only one class of stock - called common stock. Ownership rights specified in the articles of incorporation or by-laws. Proof of stock ownership is a printed or engraved form known as a stock certificate.
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cash stock
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Example：Alpha



The issued share capital of Alpha, a limited liability company, is as follows: $ Ordinary shares of 10c each 1,000,000 8% Preference shares of 50c each 500,000 In the year ended October 31, 2002, the company has paid the preference dividend for the year and an interim dividend of 2c per share on the ordinary shares. A final ordinary dividend of 3c per share is proposed. What is the total amount of dividends relating to the year ended October 31, 2002?
Βιβλιοθήκη Baidu
11 3
Dividend...


Is a distribution by a corporation to its stockholders on a pro rata basis. Pro rata means that if you own 10% of the common shares, you will receive 10% of the dividend. Common dividend forms:
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Entries for Cash Dividends
Three dates are important in connection with dividends: the declaration date the record date the payment date
M o n th a n d y e a r
12/1 Retained Earnings 50,000 Dividends Payable 50,000
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The Record Date...
The date ownership of the outstanding shares is determined for dividend purposes.