Stockholders' Equity Part 1
Stockholders' Equity Part 1
Stockholders' Equity Part 1
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Corporate Capital
Common Stock
Account
Contributed
Share Premium
Capital Account
Preferred Stock
Account
Less:
Treasury Stock
Account
Other Comprehensive
Income
LO 2 Identify the key components of stockholders’ equity.
Account
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Corporate Capital
Issuance of Stock
Terms:
a. Authorized– the maximum number of stocks and
amount that a corporation can issue
b. Subscribed – the shares and amount that a
stockholder has promised to pay.
c. Paid – amount paid on the subscription
d. Issued and outstanding – the number of shares and
amount that have been fully paid and certificate of
stock has been issued to the stockholder.
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Corporate Capital
Issuance of Stock
Shares/stock are issued either at:
1. Par value stock.
2. No-par stock.
3. Stock issued with other securities.
4. Stock issued in noncash transactions.
5. Costs of issuing stock.
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Corporate Capital
The par value is the stated value per share. This price was
printed on paper stock certificates.
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Corporate Capital
Journal entry:
Cash 3,000
Common stock (300 x P10) 3,000
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Corporate Capital
Journal entry:
Cash 4,100
Common stock (300 x P10) 3,000
Share Premium 1,100
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Corporate Capital
No-Par Stock
Reasons for issuance:
Avoids contingent liability.
Avoids confusion over recording par value
versus fair market value.
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Corporate Capital
Example 3:
3: Do Kyungsoo Corporation issued 600 shares of
no-par common stock for P10,200. Prepare Do Kyungsoo’s
journal entry if (a) the stock has no stated value, and (b) the
stock has a stated value of P2 per share.
Journal entry:
a. Cash 10,200
Common stock 10,200
b. Cash 10,200
Common stock (600 x P2) 1,200
Share premium 9,000
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Corporate Capital
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Corporate Capital
Example 4:4: Kim Soo Hyun Corporation issued 300 shares of P10
par value common stock and 100 shares of P50 par value preferred
stock for a lump sum of P14,200. The common stock has a market
value of P20 per share, and the preferred stock has a market value
of P90 per share.
Number Amount Total Percent
Common stock 300 x $ 20.00 = $ 6,000 40%
Preferred stock 100 x 90.00 9,000 60%
Fair Market Value $ 15,000 100%
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Corporate Capital
Example 5: Kim Soo Hyun Corporation issued 300 shares of P10
par value common stock and 100 shares of P50 par value preferred
stock for a lump sum of P14,200. The common stock has a market
value of P20 per share, and the preferred stock has a market value
of $90 per share.
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Corporate Capital
Example 5: Kim Soo Hyun Corporation issued 300 shares of $10 par
value common stock and 100 shares of P50 par value preferred
stock for a lump sum of P14,200. The common stock has a market
value of P20 per share, and the value of the preferred stock is
unknown.
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Corporate Capital
Example 5: Kim Soo Hyun Corporation issued 300 shares of P10
par value common stock and 100 shares of P50 par value preferred
stock for a lump sum of P14,200. The common stock has a market
value of P20 per share, and the value of the preferred stock is
unknown.
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Corporate Capital
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Corporate Capital
Example 6: Song Jong Ki Corporation was organized on January
1, 2020. It is authorized to issue 500,000 shares of no par
common stock with a stated value of P1 per share. Prepare the
journal entry to record the following.
Land 75,000
Common stock (24,000 x P1) 24,000
Share premium – common 51,000
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Corporate Capital
Example 6: Song Jong Ki Corporation was organized on January
1, 2020. It is authorized to issue 500,000 shares of no par
common stock with a stated value of P1 per share. Prepare the
journal entry to record the following.
Land 80,000
Common stock (24,000 x P1) 24,000
Share premium - common 56,000
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Corporate Capital
Example 6: Song Jong Ki Corporation was organized on January
1, 2020. It is authorized to issue 500,000 shares of no par
common stock with a stated value of P1 per share. Prepare the
journal entry to record the following.
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Corporate Capital
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