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Accounting 211
Thursday, February 25th, 1999
Announcements:
Office Hours next week: Monday 2:30-3:30, Wednesday 9-10, Thursday 1-3
Lecture notes:
Page 537, Problem A5
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1/19 |
Cash |
31,500 |
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Common Stock |
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15,000 |
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PICE (SV) |
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16,500 |
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1/21 |
Organization Costs |
11,000 |
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Common Stock |
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5,000 |
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PICE (SV) |
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6,000 |
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2/7 |
Building |
78,000 |
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Common Stock |
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30,000 |
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PICE (SV) |
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48,000 |
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3/22 |
Treasury Stock |
30,000 |
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Cash |
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30,000 |
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7/15 |
Cash |
15,000 |
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Common Stock |
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5,000 |
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PICE (SV) |
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10,000 |
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8/1 |
Cash |
10,000 |
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Treasury Stock |
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7,500 |
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PIC (TS) |
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2,500 |
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9/1 |
Dividends |
7,125 |
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Dividends Payable |
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7,125 |
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9/25 |
Dividends Payable |
7,125 |
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Cash |
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7,125 |
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10/30 |
Land |
12,000 |
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Common Stock |
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4,000 |
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PICE (SV) |
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8,000 |
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12/15 |
Cash |
110,000 |
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Preferred Stock |
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110,000 |
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Number of shares issued = 59,000 |
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Number of shares outstanding = 51,500 |
12/31
The company declared a 10% common stock dividends
Market Value = $4
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12/31 |
Stock Dividend Declared |
20,600 |
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Common Stock Distributable |
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5,150 |
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PICE (SV) |
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15,450 |
1/15
The stock dividend is distributed
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1/15 |
Common Stock Distributable |
5,150 |
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Common Stock |
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5,150 |
*NO CHANGE in total SE
The impact of the stock dividend on SE:
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Retained Earnings down 20,600 |
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Common Stock up 5,150 |
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PICE (SV) up 15,450 |
Example:
NKC Inc. Balance Sheet
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Common Stock |
100,000 |
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Preferred Stock |
40,000 |
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Retained Earnings |
35,000 |
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- Treasury Stock |
- 10,000 |
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Total SE |
$165,000 |
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Common Stock Par Value = $10 |
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Preferred Stock Par Value = $50 |
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Preferred Stock Call Value = $60 / share |
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Treasury Stock = 800 shares of Common Stock |
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Number of shares issued: |
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Common Stock = 10,000 |
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Preferred Stock = 800 |
Number of Shares Outstanding
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Common Stock = 9,200 |
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Preferred Stock = 800 |
Call Value of the Preferred Stock
800 x 60 = $48,000 = Book Value
Common Stock Book Value
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Total SE |
165,000 |
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- Preferred Stock Value |
- 48,000 |
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Common Stock Book Value |
$117,000 |
Common Stock Book Value per Share
117,000 / 9,200 = $12.72
NEW INFO: Preferred stock dividends in arrears = $5,000
Preferred Stock Book Value per Share
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Call Value |
48,000 |
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+ Dividends in Arrears |
+ 5,000 |
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Total Book Value |
$53,000 |
Book Value per Share = 53,000 / 800 = $66.25
Common Stock Book Value per Share
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105,000 |
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- 53,000 |
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Total Book Value |
$112,000 |
Book Value per Share = 112,000 / 9,200 = $12.17
Stock Splits
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Number of common shares issued = 10,000 |
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Par Value per share = $10 |
A 2 FOR 1 SPLIT IS DECLARED
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Number of common shares issued = 20,000 |
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Par Value per share = $5 |
*NO JOURNAL ENTRY
Chapter 13
- Stock Dividends
- Book Value of Common Stock and Preferred Stock
- Stock Splits
*GAAP: generally accepted accounting principle
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