ACC 305 Lecture Notes - Lecture 28: Treasury Stock, Retained Earnings, Preferred Stock

8 views2 pages

orangegnat648

17 Aug 2019

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Contributed capital is recognized when the corporation raises capital by issuing shares directly to shareholders. Can involve as many as four or more components. Treasury stock (repurchased stock, reduces outstanding shares) Preferred stock (different ownership rights from common stock) Example: crosley corporation sold 100 shares of its par common stock for per share. The journal entry to record the transaction is as follows: Earned capital consists of retained earnings and accumulated other comprehensive income. Retained earnings is the total amount of corporate net income that has been earned but not been distributed to shareholders as dividends. Deficit arises when cumulative net losses and/or dividends exceed cumulative net income. Accumulated other comprehensive income (loss) is the cumulative amount of other comprehensive income (or loss) Noncontrolling interests arise when a parent company consolidates financial statements of a less-than-100%-owned subsidiary company. Financial statements must include a disclosure of the ending balances and the changes in its shareholders" equity accounts.

Related Questions

Common Stock Issuance, Treasury Stock, Preferred Stock,Dividends, Comprehensive Income, Disclosure. Castleline,Inc. reported the following shareholdersâ equity section as of thebeginning of the current year:

Stockholder's Equity

Contributed Capital:
Common Stock, $1 Par Value, 3,850,000 shares authorized,905,000 shares issued, and 821,500 shares outstanding	$905,000
Additional Paid-in Capital in Excess of Par-Common	22,625,000
Total Contributed Capital:	$23,530,000
Retained Earnings:	$8,957,450
Accumulated Other Comprehensive Income	1,057,600
Less: Treasury Stock (83,500 common stock shares at cost)	(1,670,000)
Total Stockholders Equity:	$31,875,050

During the current year, Castleline engaged in the followingtransactions affecting the stockholdersâ equity section of itscurrent balance sheet.

Issued 400,000 shares of its $1 par value common stock at $31per share. The underwriter charged a 3% fee for issuing the shares.The stock issue costs are not capitalized.

Issued 500,000 shares of $10 par value 6% preferred stock(2,550,000 authorized) at $40 per share. These shares wereprivately placed and Castleline did not pay stock issue costs.

Purchased 220,000 shares of common stock at $32 per share.

Declared a $450,000 dividend for the first half of the year.(The declarations should be recorded separately for the common andthe preferred shares.)

Sold 105,000 of the treasury shares at $44 per share. (The83,500 treasury shares on hand at the beginning of the year areconsidered sold first. The company paid $20 per share for theseshares of treasury stock).

Paid the cash dividends.

Reported net income of $3,180,500 for the current year.

In addition to the net income, Castleline incurred an $801,000unrealized loss on an available-for-sale investment.

Declared a $450,000 cash dividend for the second half of theyear. (The declarations should be recorded separately for thecommon and the preferred shares.)

Closed out all dividends and other comprehensive incomeaccounts.

Required Â»

Prepare all journal entries required to record the transactionslisted above.

raspberryreindeer434

Match the items below by selecting the appropriate number in thespace provided.

Net income retained in the corporation.
The amount that must be retained in the business for theprotection of creditors.
Preferred stockholders have a right to receive current andunpaid prior-year dividends before common stockholders receive anydividends.
Creditors only have corporate assets to satisfy theirclaims.
Responsible to stockholders for corporate activity.
The amount assigned to each share of stock in the corporatecharter.
Unit of ownership in a corporation.
Enables stockholders to maintain their same percentageownership when new shares are issued.
Corporation's own stock that has been reacquired by thecorporation but not retired.
Total amount paid-in on capital stock.

1.	Limited liability
2.	Capital stock
3.	Board of directors
4.	Paid-in capital
5.	Retained earnings
6.	Preemptive right
7.	Par value
8.	Legal capital
9.	Treasury stock
10.	Cumulative feature

pearzebra975

Eliminating Entries, Goodwill

Pendragon Corporation acquired all of the stock of Sherwood,Inc. for $400 million in cash. Sherwoodâs stockholdersâ equityaccounts at the date of acquisition were as follows:

(in millions)
Common stock, par	$5
Additional paid-in capital	15
Retained earnings (deficit)	(40)
Accumulated other comprehensive loss	(2)
Treasury stock	(3)
Total stockholders' equity (deficit)	$(25)

The following previously unreported assets of Sherwood werereported in the acquisition (in millions):

Customer lists	$65
Brand names	100

Assume Sherwood's fixed assets are overstated by $35 million,its liabilities are overstated by $1 million, and its other assetsand liabilities are fairly reported.

(a) Calculate the goodwill for this acquisition.
$Answer

million

(b) Present the working paper eliminating entries necessary toconsolidate the balance sheets of Pendragon and Sherwood at thedate of acquisition. (Enter answers in millions).

Consolidation Journal
Description	Debit	Credit
(E)
Common stock	Answer	Answer
Additional paid-in capital	Answer	Answer
AnswerTreasury stockCommon StockInvestment in Sherwood,Inc.Gain on purchaseEquity in net income of Sherwood,Inc.GoodwillCash	Answer	Answer
Retained earnings	Answer	Answer
Accumulated other comprehensive loss	Answer	Answer
AnswerInvestment in Sherwood, Inc.Gain on purchaseTreasurystockCashCommon StockEquity in net income of Sherwood,Inc.Goodwill	Answer	Answer

(R)
Customer lists	Answer	Answer
Brand names	Answer	Answer
AnswerGoodwillEquity in net income of Sherwood, Inc.Investmentin Sherwood, Inc.Treasury stockGain on purchaseCommonStockCash	Answer 0.00 points out of 1.00	Answer
Fixed assets, net	Answer	Answer
Liabilities	Answer	Answer 0.00 points out of 1.00
AnswerEquity in net income of Sherwood, Inc.CashInvestment inSherwood, Inc.Treasury stockGain on purchaseCommonStockGoodwill	Answer	Answer

bronzefish866

ACC 305 Lecture Notes - Lecture 28: Treasury Stock, Retained Earnings, Preferred Stock

Document Summary

Get access

Related Documents

ACC 305 Lecture Notes - Lecture 5: Income Statement, Financial Statement, Retained Earnings

ACC 305 Lecture Notes - Lecture 41: Accrual, Retained Earnings, Income Statement

ACC 305 Lecture Notes - Lecture 14: Trial Balance, General Ledger, Accounting Equation

Related Questions