1. ACG 2021 Chapter 9 Summary

2. Elements of Stockholders Equity Paid in Capital ▫Preferred Stock ▫Common Stock ▫Additional Paid in Capital Total Paid In Capital Retained Earnings Treasury Stock Total Stockholders Equity

3. Preferred Stock Characteristics Non-Voting Dividends 1 st ▫Stated as a %  10% of par value  If Par Value is $100, Dividend = $10 ▫ or $ amount  $4 per share Assets 1st

4. Common Issued with Par Value Cash xxxx ▫Common Stock xxxx ▫Additional Paid in Capital xxxxx Issued without Par Value Cash xxxx ▫Common Stock xxxx

5. Treasury Stock Repurchase of Companies own stock Contra Stockholders Equity Purchase of Shares: ▫Treasury Stock xxxxx  Cash xxxxx Sale of Shares: ▫Gain  Cash xxx  Treasury Stock xxx  Additional PIC xxx ▫Loss  Cash xxx  Retained Earningsxxx  Treasury Stockxxx

6. Dividends Reduce Retained Earnings Cash Dividends (3 Dates, 2 Journal Entries) ▫Date of Declaration  Retained Earnings xxxx  Dividend Payable xxxxx ▫Date of Record  Owners of stock at this date will receive dividend  No Entry ▫Date of Payment  Dividend Payable xxxx  Cashxxxxx

7. Dividends Stock Dividends ▫Small, 25% or less  Record at Market Value ▫Large > 25%  Record at Par Retained Earnings xxxxx ▫Common Stock xxxxx ▫Additional PICxxxxx (if small dividend) Effect on Stockholders Equity = 0

8. Stock Split No Transaction No Effect on Stockholders Equity Increases # of Shares, Authorized, Issued and Outstanding Reduces Market value of Stock

9. Ratios Return on Assets = ▫Net Income + Interest Expense ▫Average Total Assets Return on Equity = ▫Net Income – Preferred Dividends ▫Average Common Stockholders Equity