These are notes I took during my Intermediate Accounting 2 course. These notes were taken during lecture and are structured to help me remember certain journal entries. They helped me with homework and quizzes.
Stockholder’s Equity
common stock issuance and repurchases, dividends on common stock (Chapter 15)
Owner’s Equity=Net Assets (government)
At time 1, Mr. Spacely owns the assets after liab have been paid off
Also owns intangibles, not just Assets-Liab
-
Residual interest*
Common Stock- contract
-
Dividend
-
Voting
-
Acquisition and liquidation
1% of residual interest
Class A: voting (1)
Class B: voting (10)*
Class C: 0 votes
Blue Apron Class A stock valuable (no voting or dividends) due to consideration in mergers and
acquisitions
Right to sell shares to others is not val itself
Issued shares- shares sold over whole lifetime
Buybacks- taxed 2023 and on (does not cancel issued shares> goes to treasury shares)
Outstanding shares- # of shares owned by outside investors (issued-treasury)
Treasury shares- bought back shares
Par= placeholder, does not mean anything
Paid-in Capital- proceeds from sales of common stock
Entry ex:
Cash
Common stock sold at par
Additional Paid-In Capital
If par=0, all proceeds in Paid in Cap
Issuance costs paid from stock sale proceeds so never hits company’s balance sheet PRACTICE (entry for sale of common stock):
Blue Apron Holdings, Inc. sold 30 million shares of Class A common stock in its initial public
offering.
The offering price was $10 per share and the company paid issue costs of $0.55 per share.
Par value is $0.0001 per share.
Cash 283,500,000
30 mill x (10 - .55)
Common Stock @ par
3000
30 mill x $.0001
Additional Paid-In Capital
283,497,000
cash-common
stock @ par
Tesla Ex:
Common stock+additional paid in cap for one year - CS+additional paid in cap for other year=
proceeds company made
Payment of an expense with stock (without stock price):
●
Party Expense
6000
Common Stock at par
0
Add Paid in Cap
6000
Payment of an expense with stock price:
●
Party Expense
8000
CS @ par
400 (.10*4000)
Add Paid in Cap
7600 (8000-400)
Dividends……………………………………………………………………………………………………
Declaration Date- div becomes liability
Record Date- date you have to own share on to receive div
Ex-dividend date- last date you need to buy shares by to be a shareholder on record date
Payment Date- Div paid out
Share repurchases valuable
*Treasury shares
are
issued shares that the company
later bought back from shareholders
After a repurchase, shareholders who did not sell shares back own larger portion of company
Corporations record repurchase of shares in a contra-equity account “Treasury Stock”
Difference between Shares in treasury in two diff years gives you how much company spent on
dividends
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