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Flashcards in Stocks Deck (14)
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1

Issue of Stocks for Cash

DR Cash/Asset
CR Common/Preferred Stock

2

Preferred Share Conversion to Common Shares

DR Preferred Stock (with the BOOK VALUE)
CR Common Stock

Conversion value = value in preferred stock * % of shares converting (update # of stocks after this, should have less p/s and more c/s)

3

Cash Dividend: Date of Declaration

DR Retained earnings
CR Dividends payable

4

Cash Dividend: Date of Record

No entry

5

Cash Dividend: Date of Payment (Distribution)

DR Dividends Payable
CR Cash

6

Stock Dividend: Date of Declaration

DR Retained earnings
CR Dividends Distributable (NOT A LIABILITY)

7

Stock Dividend: Date of Record

No entry

8

Stock Dividend: Date of Payment

DR Dividends Distributable
CR Common Stock
(update # of stocks after this)

9

Calculating stock dividend value

1) Multiply # of common shares oustanding by % of dividends declared
2) Multiply new # of shares issued by MARKET price of stock at time dividend was declared
= new value for entry on date of declaration

10

Stock splits

No entry, just update the # of shares

11

Stock repurchase if purchase price is less than book value

DR Common stock
CR Contributed capital, common stock (the difference)
CR Cash

12

Stock repurchase if purchase price is greater than book value

DR Common stock
DR Retained earnings and/or Contributed capital, common shares (the difference) --> can only DR contributed capital until a 0 balance, and remainder must be DR to retained earnings (if there's no contributed capital account open, DR entire amount to RE)
CR Cash

13

Book Value of Common Shares Calculation (for a common stock repurchase)

Average share price * # of shares repurchased

14

Cash Paid for a repurchase calculation

# of shares repurchased * share price