FundamentalAccounting.ppt

* Issuing Stock Issuing stock at par for cash Dr: Cash Cr: Common Stock Preferred Stock Issuing stock at a premium Dr: Cash Cr: Common/Preferred Stock Paid-in Capital in Excess of Par-Value * Other Sources of Paid-in Capital ----- Donated Capital Dr: Land Cr: Donated Capital * UINT 4 Treasury Stock Treasury Stock Such stock that a corporation has once issued and then reacquires is called treasury stock. Purchase treasury stock Reissue treasury stock * UINT 5 Retained Earnings the balance of Retained Earnings The balance of retained earnings account at the end of the fiscal year is created by closing entries. First, the balance in the income summary account (the net income or net loss) is transferred to Retained Earnings. Second, the balance of the dividends account is transferred to Retained Earnings. * Prior Period Adjustments the correction of material accounting errors Events occurring after the balance sheet date Restricted Retained Earnings legal reserve secret reserve * UINT 6 Comprehensive Income the meaning of comprehensive income Comprehensive income is defined as all changes in stockholders’ equity during a period except those resulting from dividends and stockholders’ investments. comprehensive income = traditional net income +(-) other comprehensive income items * the comprehensive income statement net income other comprehensive income statement: foreign currency items pension liability adjustment unrealized gains and losses on investments comprehensive income per share * UINT 7 Dividends and Stock Split Cash Dividend There are three conditions that a corporation must meet to pay a cash dividend: Sufficient retained earnings Sufficient cash Formal action by the board of directors * Dividend Date the date of declaration Dr: Cash Dividend Cr: Cash Dividend Payable the date of record: no entry the date of payment Dr: Cash Dividend Pa