Stockholder's Equity Flashcards
Irredeemable PS
No specific maturity date and stockholders can only get their capital back if the company winds up in liquidation
Redeemable PS
Company is obligated to buy back shares after a certain period
Cumulative PS
Dividend acummulations occur where holders are entitled to receive dividends for the current period even if dividends aren’t declared
Fully participating preferred shares
holders have the right to participate in additional dividends beyond their fixed percentage; surplus dividends beyond those paid out based on a pro rata basis
How are redeemable preferred shares recorded?
debt
Noncumulative
dividends that weren’t declared in prior periods don’t accumualte
partially participating
entitled to receive additional dividends but the surplus has a cap
Convertible preferred stock
holders have a right to convert shares into a fixed number of common shares at a predetermined rate
Callable preferred stock
right but not the obligation to repurchase or “call” the shares at a predetermined price
How are irredeemable PS recorded?
equity
journal entry for issuing a subscription
Dr. Cash
Dr. Subscription receivable
Cr. CS - Subscription
Cr. APIC - CS
journal entry for receiving balance of stock subscription and stocks are issued
Dr. Cash
Cr. Subscription receivable
Dr. CS - Subscription
Cr. CS
Journal entry for stock subscriptions forfeited
Dr. CS - Subscription
Dr. APIC - CS
Cr. Subscription receivable
Cr. Subscription forfeited
Journal entry for stock subscriptions cancelled
Dr. CS - Subscriptions
Dr. APIC - CS
Cr. Cash
Cr. Subscription receivables
APIC treasury
repurchased stocks are sold for more than the repurchase price under the cost method and when stocks are repurchased at less than the original issue price under par value method
APIC warrants
value allotted to detachable warrants when issued with bonds or preferred stock
Ending retained earnings formula
beg RE
+/- Net Income/Loss
+/- AOCI
-Dividends
How are property dividends valued
fair value and adjusted for any gain or loss
how are small stock dividends recorded?
fair value
how are large stock dividends declared?
par value
How are scrip dividends recorded
liability
Journal entry to record a scrip dividend date of declaration
Dr. RE
Cr. Scrip dividend payable
journal entry to record a scrip dividend at the balance sheet date
Dr. interest expense
Cr. interest payable
journal entry to record a scrip dividend at the date of payment
Dr. Scrip dividend payable
Dr. Interest payable
Cr. Cash
