ADMS 2500 Chapter Notes - Chapter 15: Retained Earnings, Dividend, Net Income

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amethystdog467

1 Nov 2014

School

York University

Department

Administrative Studies

Course

ADMS 2500

Professor

Haiping Wang

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ADMS 2500 Full Course Notes

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Dividends: potential buyers and sellers of shares are very interested in a company"s dividend policies. 2 forms of dividends: cash and stock: dividends are expressed 2 ways: $ per share or % of legal capital. Cash dividends: to pay a cash dividend, the following must be true, sufficient retained earnings, adequate cash, declaration of dividends by board of directors. Important dates & entries: declaration date (legal obligation, entry required: Who owns the share on this date is paid dividend (no journal entry: payment date. Cheque is mailed to shareholders: entry required: Cash xxx xxx: normally, there are 2-4 weeks between each date. If stock is cumulative, dividend in arrears must be paid 1st: dividends are not liability until declared. Common stock div distributable xxx xxx (see p. 695: common stock div distributable is a shareholder"s equity account (not a liability, payment date: Homework: p. 718 be 15 1, 2, 3.

Related Questions

APPLY THE CONCEPTS: Calculate the common and preferred dividendsPacioli Corporation has been incorporated for 30 years. Its currentpaid-in capital is shown to the right. Pacioli has been expandingits operations; its board of directors declared a small dividend of$2,000 in 2009 and no dividend in 2010. The expansion was asuccess, and profits have increased. On December 3, 2011, the boardof directors declared a dividend of $316,500 to stockholders onrecord at December 22, 2011, to be paid on December 29, 2011.Paid-in capital for Pacioli Corporation: Preferred stock, $10 par,5%, 12,000 shares authorized, 7,000 shares issued and outstanding$70,000 Common stock, $3 par, 200,000 shares authorized, 150,000shares issued, 140,000 shares outstanding 450,000 Additionalpaid-in capitalâpreferred stock 49,000 Additional paid-incapitalâcommon stock 168,000 Total paid-in capital $737,000Determine the annual preferred dividend, assuming the number ofshares of preferred stock issued and outstanding has not changedfor the past three years: $? x ?% x? shares = $? How much dividendis in arrears for 2009? $? How much dividend is in arrears for2010? $? Use the information in the above table and calculated tothe above to complete the table below to illustrate thedistribution of the 2011 dividend. Total 2011 dividend declared $?2009 Dividends in arrears for 2009 $? 2010 Dividends in arrearsfor 2010 $? 2011 Current dividend $ ?Total preferred dividends $Dividends to common stockholders $ After you have determined thedividends available to the common stockholders, calculate thedividend per share to be paid to each common stockholder. Ifrequired, round the per share amount to the nearest cent. $ = $ pershare shares Show All Feedback Hide APPLY THE CONCEPTS: Prepare thejournal entries for Pacioliâs dividend> Pacioli uses temporaryaccounts to record dividends and closes those accounts to RetainedEarnings at the end of the period. Use the selection lists to theleft of the journal to illustrate the effect on the accountingequation. If you are not sure about the account titles, refer tothe chart of accounts below the last journal entry. Prepare thejournal entry for preferred dividends required on the declarationdate. GENERAL JOURNAL page DATE DESCRIPTION DOC. NO. POST. REF.DEBIT CREDIT 1 Dec. 3 1 2 2

violettoad843

Morrow Enterprises Inc. manufactures bathroom fixtures. Thestockholdersâ equity ac- counts of Morrow Enterprises Inc., withbalances on January 1, 2016, are as follows:

Common Stock, $20 stated value (500,000 shares authorized,375,000 shares issued) . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .

Paid-In Capital in Excess of Stated ValueâCommon Stock . . . . .. . . . . . . Retained Earnings . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Treasury Stock (25,000 shares, at cost) . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .

The following selected transactions occurred during theyear:

$ 7,500,000 825,000 33,600,000 450,000

Jan. 22.

Apr. 10. June 6. July 5.

Aug. 15. Nov. 23. Dec. 28.

Paid cash dividends of $0.08 per share on the common stock. Thedividend had been properly recorded when declared on December 1 ofthe preceding fiscal year for $28,000.

Issued 75,000 shares of common stock for $24 per share. Sold allof the treasury stock for $26 per share.

Declared a 4% stock dividend on common stock, to be capitalizedat the mar- ket price of the stock, which is $25 per share.

Issued the certificates for the dividend declared on July 5.Purchased 30,000 shares of treasury stock for $19 per share.Declared a $0.10-per-share dividend on common stock.

31. Closed the credit balance of the income summary account,$1,125,000. 31. Closed the two dividends accounts to RetainedEarnings

Instructions

1. Enter the January 1 balances in T accounts for thestockholdersâ equity accounts listed. Also prepare T accounts forthe following: Paid-In Capital from Sale of Treasury Stock; StockDividends Distributable; Stock Dividends; Cash Dividends.

2. Journalize the entries to record the transactions, and postto the eight selected accounts. 3. Prepare a retained earningsstatement for the year ended December 31, 2016. 4. Prepare theStockholdersâ Equity section of the December 31, 2016, balancesheet.

grayspider936

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholdersâ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:

Common stock, $20 stated value; 500,000 shares authorized, 399,000 issued	$7,980,000
Paid-In Capital in Excess of Stated ValueâCommon Stock	877,800
Retained Earnings	34,554,000
Treasury Stock (22,500 shares, at cost)	382,500

The following selected transactions occurred during the year:

Jan.	22	Paid cash dividends of $0.07 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $26,355.
Apr.	10	Issued 73,000 shares of common stock for $23 per share.
Jun.	6	Sold all of the treasury stock for $26 per share.
Jul.	5	Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $24 per share.
Aug.	15	Issued the certificates for the dividend declared on July 5.
Nov.	23	Purchased 30,000 shares of treasury stock for $20 per share.
Dec.	28	Declared a $0.09-per-share dividend on common stock.
	31	Closed the credit balance of the income summary account, $1,162,500.
	31	Closed the two dividends accounts to Retained Earnings.

	Required:
A.	Enter the January 1 balances in T accounts for the stockholdersâ equity accounts listed.

pearjellyfish184

ADMS 2500 Chapter Notes - Chapter 15: Retained Earnings, Dividend, Net Income

ADMS 2500 Full Course Notes

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