Stocks Flashcards
Stocks - common stock
Rights come from the state of incorporation
Issued
Authorized
Outstanding
Authorize- how many you can sell
Issued - how many sold
Outstanding- how many held by the public (could be less than issued if there is treasury stock)
Treasury stock
Stock bought back by the company
Normal debit balance
It is the difference between the issued and the outstanding
Dividends issued for issued stock or outstanding?
Outstanding
Treasury stock not eligible for dividends
Par value of the stock can’t be spent by the company (held)
Par value protects the buyers
Stock and APIC have D or C balances?
Credit balances
Balance sheet must show
Authorized
Issued
Outstanding
JV
D cash
C common stock at par
C. Addtl paid in capital (plug) APIC
Stock subscription
D acct receivable
C. Common stock subscribed
Can’t issue the stock until you have all the funds
C APIC - any APIC gets credited now
Preferred stock
Has no set rights, all rights are in the certificate
Normally has a set dividend and is superior to common stock
Preferred stock cumulative dividends
They must be paid and can’t be skipped
If it is not declared then a footnote
If it is declared then a liability is created
Convertible Preferred Stock
Will include a ratio to convert preferred to common
Common stock prices moves faster, the dividend changes - company does well so common stock does well
Participating preferred stock
It can be cumulative, convertible and participating
Fully participating percentage goes to both preferred dividend and common dividend
Then pro-rate what’s left between the common and the participating
Treasury stock recording methods
Cost method and par value method
Treasury stock - cost method
JV - bought back by company
D treasury stock
C cash
Treasury stock is contra equity and Carries a normal debit balance
