MGMT 30A Lecture Notes - Lecture 10: Treasury Stock, Preferred Stock, Common Stock

• School: UC-Irvine
• Department: Management
• Course: MGMT 30A
• Professor: Machiavelli Chao

Document Summary

Randomly assigned value to each share of stock. Common stock: stock issued by co to shareholders. Debit cash, credit common stock (par), credit additional paid-in-capital (plug) Dividend amount stated as percent of par value. Debit cash, credit preferred stock (par), credit additional paid-in-capital (plug) Treasury stock: co repurchases shares of common stock. Resale of treasury stock at reacquisition cost. Resale of treasury stock above reacquisition cost. Debit cash, credit treasury stock (cost), credit additional paid-in-capital (plug) Cash dividends: distribution of cash/stock to shareholders on proportional basis. Declaration date: date the board declares that dividend will be paid. Debit dividends (temporary stockholders equity, debit account), credit dividends payable (liabilities account) Record date: only shareholders who own stock in the co as of today will be eligible to receive dividends. Allocating dividends between preferred and common stock, preferred must be paid first, not cumulative. Preferred shareholders: shares * par values * rate = annual preferred dividends.