Académique Documents
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13-1
Chapter 13
Corporations:
Organization and
Capital Stock
Transactions
Chapter
13-2 Accounting Principles, Ninth Edition
Study Objectives
Chapter
13-3
Corporations: Organization and Capital
Stock Transactions
Chapter
13-4
The Corporate Form of Organization
Chapter
13-5
Characteristics of a Corporation
President and
Chief Executive
Officer
Treasurer Controller
Chapter
13-15 SO 1 Identify the major characteristics of a corporation.
Forming a Corporation
Initial Steps:
File application with the Secretary of State.
State grants charter.
Corporation develops by-laws.
Chapter
13-16 SO 1 Identify the major characteristics of a corporation.
Ownership Rights of Stockholders
Illustration 13-3
Stockholders have the right to:
Chapter
13-17 SO 1 Identify the major characteristics of a corporation.
Ownership Rights of Stockholders
Illustration 13-3
Stockholders have the right to:
3. Keep the same percentage ownership when new
shares of stock are issued (preemptive right*).
Chapter
13-19 SO 1 Identify the major characteristics of a corporation.
Ownership Rights of Stockholders
Illustration 13-4 Prenumbered
Class
Class A Class A
COMMON STOCK COMMON STOCK
Name of corporation
Stockholder’s name
Shares
Stock Certificate
Signature of
corporate official
Chapter
13-20 SO 1 Identify the major characteristics of a corporation.
Stock Issue Considerations
Authorized Stock
Charter indicates the amount of stock that a
corporation is authorized to sell.
Number of authorized shares is often reported
in the stockholders’ equity section.
Chapter
13-21 SO 1 Identify the major characteristics of a corporation.
Stock Issue Considerations
Issuance of Stock
Corporation can issue common stock directly to
investors or indirectly through an investment
banking firm.
Factors in setting price for a new issue of stock:
1. the company’s anticipated future earnings
2. its expected dividend rate per share
3. its current financial position
4. the current state of the economy
5. the current state of the securities market
Chapter
13-22 SO 1 Identify the major characteristics of a corporation.
Stock Issue Considerations
Chapter
13-23 SO 1 Identify the major characteristics of a corporation.
Chapter
13-24
Stock Issue Considerations
Chapter
13-25 SO 1 Identify the major characteristics of a corporation.
Corporate Capital
Common Stock
Account
Paid-in Capital in
Paid-in Capital
Excess of Par
Account
Preferred Stock
Account
Two Primary
Sources of Retained Earnings
Account
Equity
Common Stock
Account
Additional Paid-
Paid-in Capital
in Capital
Account
Preferred Stock
Account
Two Primary
Sources of Retained Earnings
Account
Equity
Chapter
13-27 SO 2 Differentiate between paid-in capital and retained earnings.
Corporate Capital
Chapter
13-28 SO 2 Differentiate between paid-in capital and retained earnings.
Accounting for Common Stock Issues
Primary objectives:
1) Identify the specific sources of paid-in capital.
2) Maintain the distinction between paid-in capital
and retained earnings.
Chapter
13-29 SO 3 Record the issuance of common stock.
Accounting for Common Stock Issues
Cash 4,100
Common stock (300 x $10) 3,000
Paid-in capital in excess of par 1,100
Chapter
13-30 SO 3 Record the issuance of common stock.
Accounting for Common Stock Issues
a. Cash 10,200
Common stock 10,200
b. Cash 10,200
Common stock (600 x $2) 1,200
Paid-in capital in excess of stated value 9,000
Chapter
13-31 SO 3 Record the issuance of common stock.
Accounting for Common Stock Issues
Chapter
13-32 SO 3 Record the issuance of common stock.
Accounting for Common Stock Issues
Chapter
13-33 SO 3 Record the issuance of common stock.
Accounting for Common Stock Issues
Chapter
13-34 SO 3 Record the issuance of common stock.
Accounting for Treasury Stock
Common Stock
Account
Paid-in Capital in
Paid-in Capital
Excess of Par
Account
Preferred Stock
Account
Two Primary
Sources of Retained Earnings
Account
Equity
Less:
Treasury Stock
Account
Chapter
13-35 SO 4 Explain the accounting for treasury stock.
Accounting for Treasury Stock
Chapter
13-37 SO 4 Explain the accounting for treasury stock.
Accounting for Treasury Stock
Chapter
13-38 SO 4 Explain the accounting for treasury stock.
Accounting for Treasury Stock
Chapter
13-40 SO 4 Explain the accounting for treasury stock.
Above
Accounting for Treasury Stock Cost
Chapter
13-41 SO 4 Explain the accounting for treasury stock.
Below
Accounting for Treasury Stock Cost
Chapter
13-42 SO 4 Explain the accounting for treasury stock.
Chapter
13-43
Preferred Stock
Chapter
13-44 SO 5 Differentiate preferred stock from common stock.
Preferred Stock
Chapter
13-45 SO 5 Differentiate preferred stock from common stock.
Preferred Stock
Dividend Preferences
Right to receive dividends before common
stockholders.
Per share dividend amount is stated as a
percentage of the preferred stock’s par value or
as a specified amount.
Cumulative dividend – holders of preferred
stock must be paid their annual dividend plus any
dividends in arrears before common
stockholders receive dividends.
Chapter
13-46 SO 5 Differentiate preferred stock from common stock.
Statement Presentation
Illustration 13-12
Chapter
13-47 SO 6 Prepare a stockholders’ equity section.
Copyright
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contained herein.”
Chapter
13-48