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

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

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 ...