Wiley CPAexcel Exam Review 2015 Focus Notes: Financial Accounting and Reporting

Module 15

Stockholders' Equity

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

Cost Method	Par Value Method
TS (cost)	xx	TS (par value)	xx
Cash	xx	APIC (original amount)	xx
RE (difference)	xx
or
APIC from TS (difference)	xx
Cash (cost)	xx

Sale—more than cost:

Cost Method	Par Value Method
Cash (proceeds)	xx	Cash (proceeds)	xx
TS (cost)	xx	TS (par)	xx
APIC from TS	xx	APIC (difference)	xx

Sale—less than cost:

Cost Method	Par Value Method
Cash (proceeds)	xx	Same entry as above
APIC from TS (difference up to balance)	xx
RE (remainder of difference)	xx
TS (cost)	xx

Characteristics of Preferred Stock

Preference over common stock

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

Cumulative preferred stock

• Unpaid ...