Managerial Accounting Chapter 13
Authorized stock
The number of shares that a corporation's charter allows it to sell is referred to as authorized stock.
The amount of income earned per share of a company's outstanding common stock is known as
earnings per share.
Retained earnings
generally consist of a company's cumulative net income less any net losses and dividends declares since its inception.
A liquidating dividend
is a return of a portion of the original investment back to the stockholders.
The price-earnings ratio is calculated by dividing
market value per share by earnings per share.
In many states, the minimum amount htat stockholders must contribute to the corporation, and which is intented to protect the creditors of the corporation is called the
minimum legal capital
A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called
no-par stock.
The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is referred to as
paid-in-capital
Par value of a stock
refers to the value assigned per share by the corporate charter.
Prior period adjustments are reported in teh
statement of retained earnings.
Changes in retained earnings are commonly reported in the
statement of stockholder's equity.
A corporation's distribution of additional shares of its own stock to its stockholders without the receipt fo any payment in return is called a
stock dividend.
Mayan Company had net income of $33,250. The weighted-average common shares outstanding were 9,500. The company declared a $4300 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is
$3.06
A company issued 180 shares of $100 par value common stock for $21,400 cash. The toal amount of paid-in capital in excess of par is
$3400
A company's board of directors votes to declare a cash dividend of $1.55 per share of common stock. THe company has 31,000 shares authorized, 26,000 issued, and 25,500 shares outstanding. The toal amount of the cash dividend is
$39525
The following data were reported by a corporation: authorized shares 22,000. Issued shares 17,000. Treasury shares 4,000. The number of outstanding shares
13,000
The book value per share
reflects the value per share if a company is liquidated at balance sheet amounts.
Companies report prior adjustments, net of any income tax effects in teh
statement of retained earnings.
Organizational expenses
The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter.
A corporation sold 11,500 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include
a credit to common stock for $115,000
Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 200 shares to its attorneys in paymenet of a $4000 charge for drawing up the articles of incorporation. The entry to record this transaction would include
a debit to organizational expenses for $4000.
The board of directors for a corporation
are responsible for and have final authority for managing corporate activities.
When a corporation has only one class of stock, the stock is called
common stock.
Stated value of no-par stock is an amount assigned to no-par stock by the
corporation's board of directors.
Preferred stock which confers rights to prior periods' unpaid dividents even if they were not declared is classified as
cumulative preffered stock.
Changes in accounting estimates are accounted for in
current and future periods.
Book value per share is computed by
dividing stockholder's equity applicable to common shares by the number of common shares outstanding.
Prior period adjustents to financial statements can result from
unacceptable accounting practices.