M4 Dividends Flashcards
What is a stock subscription?
A contract to sell shares on credit
What is the JE to record subscriptions receivable?
DR Subscriptions Receivable - sale price
CR Common stock subscribed - Par value
CR APIC
What is the JE for collection of subscriptions?
DR Cash
CR Subscriptions receivable
What is the JE for the actual issuance of stock previously subscribed?
DR C/S Subscribed
CR Common Stock
What is a stock right? What is the JE for one
A stock right provides existing shareholders an opportunity to buy shares (usually below market value)
DR Cash
CR C/S PAR
CR APIC Residual
What is Date of Declaration
The date the board approves a dividend (a liability is created and retained earnings is debited)
What is the date of record
The date the board specifies who will receive dividends
What is the date of payment
The date on which dividends are disbursed
What is a small stock dividend?
less than 20 to 25% of the shares previously outstanding are distributed. The issuance is not expected to affect the market price of the stock.
What is the JE for a small stock dividend when FMV > Par
DR Retained Earnings FMV
CR C/S Par value
CR Paid-in Capital Plug
What % dividend is considered a large stock dividend
> 20-25%
What is the JE for a large stock dividend?
DR Retained earnings @par
CR Common stock distributable @ par
then
Dr C/S distributable @ par
CR Capital stock @ par
What type of account is Collections receivable
Contra-equity
What scenarios happen in a default or forfeiture of a subscription
- Issue stock in proportion to the amount paid
- Refund the partial payment
- Retain the partial payment as a breach of contract
What is the JE for stock issued for outside services
Dr Expense FMV of the stock issued
CR C/S at par
CR APIC
What is the JE for Property dividends
DR Retained Earnings FMV
DR Accumulated depreciation
CR PPE at cost
CR Gain (FMV-NBV) (Flows to RE)
What is a Scrip Dividend
A form of N/P committing to paying a dividend at a later date
What is a liquidating dividend
When dividends to shareholders exceed retained earnings
What effect does a reverse stock split have?
Reduces the number of shares outstanding and increases par value
What info does a statement of changes in shareholders’ equity have?
Provides changes in an entity’s primary equity components
Calculate gain on disposal
FMV-BV
How would a 5% stock dividend affect each of the following? Assets, SE RE
A no effect, SE no effect, RE decrease
Is receipt of a stock dividend recognized as revenue?
No it lowers cost basis per share. it does affect RE
Is t-stock included in shares outstanding
no they are included in shares issued
