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Wiley CPAexcel Exam Review 2014 Focus Notes: Financial Accounting and Reporting by Ray Whittington

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Focus on: Stockholders’ Equity—Module 15

STOCKHOLDERS’ EQUITY

Issuance of Common Stock

Stock Issued for Cash, Property, or Services

Journal entry:

Cash, property, or expense (fair value) xxx
Common stock (par or stated value)
xxx
Additional paid-in capital (APIC) (difference)
xxx

Common Stock Subscribed

Subscription—Journal entry:

Cash (down payment) xxx
Subscriptions receivable (balance) xxx
Common stock subscribed (par or stated value)
xxx
APIC (difference)
xxx

Collection and issuance of shares—Journal entries:

Cash (balance) xxx
Subscriptions receivable
xxx
Common stock subscribed (par or stated value) xxx
Common stock (par or stated value)
xxx

Treasury Stock

Acquisition of Shares

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Characteristics of Preferred Stock

Preference over common stock

  • Receive dividends prior to common stockholders
  • Paid before common on liquidation

Cumulative preferred stock

  • Unpaid dividends accumulated as dividends in arrears
  • Paid in subsequent periods prior to payment of current dividends to common or preferred
  • Not considered liability until declared

Participating preferred stock

  • Receive current dividends prior to common stockholders
  • Receive additional dividends, in proportion to common stockholders, in periods of high dividends

Equity Instruments ...

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