33:010:272 Lecture Notes - Lecture 11: Retained Earnings, Preferred Stock, Common Stock
28 Nov 2016
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Chapter 11 Lecture
• Two primary sources of equity: paid-in capital and retained earnings
• Corporate capital: paid- in capital divided into two: common stock and
preferred stock, leftover from these two is paid-in capital in excess of par
o Total amount of cash and other assets paid into corporation by
stockholders in exchange for capital stock is paid in capital
• Assets = liabilities + stockholders equity
o Stockholders equity broken into common stock and retained
earnings.
▪ Common stock divided into two types of paid-in capital:
common and preferred.
• When no par stock has no stated value:
o Debit cash and credit common stock
• Organizational expense can be debited and common stock and paid-in
excess credited.
o If stock is exchanged for land the organizational expense
would change to land instead.
• Value shares issued for par value (excess part below)(also shown in wiley
homework)
o Common stock, par value * 1 * # of shares
o Excess 4 * # of shares
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