1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-1 Starting a Corporation

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 11-1 TERMS REVIEW Corporation – organization with legal rights of a person and that may be owned by many people board of directors – group elected by stockholders to run the company articles of incorporation – written application requesting permission to form a corporation Charter – Approved articles of incorporation common stock – stock that does not give owners preference to earnings but does give voting rights preferred stock – stock that does give owners preference to earnings but no voting rights page 322

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 11-1 TERMS REVIEW stock certificate – paper that shows number of shares, issue date, certificate number, and name of stockholder par value – value assigned to a share of stock and printed on the stock certificate par-value stock – share of stock that has authorized value printed on it no-par-value stock – share of stock that has no authorized value printed on the stock certificate stated-value stock – no par value stock that is assigned a value by a corporation organization costs – fees and other expenses of organizing a corporation page 322

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 11-1 3 1.Nature of business. 2.Types of stock authorized. 3.Initial directors. ARTICLES OF INCORPORATION page 315 1 2

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 11-1 1.Names of incorporators. 2.Signatures of incorporators. ARTICLES OF INCORPORATION page 316 1 2

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 11-1 STOCK CERTIFICATES page 317

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 11-1 1.Write the date. 2.Enter the account title. 3.Record the receipt numbers. 4.Write the credit amount. 5.Write the debit amount. TRANSACTIONS INCURRED WHEN STARTING A CORPORATION page 319 12345

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 11-1 ORGANIZATION COSTS OF A CORPORATION page 320

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-2 Stock Subscriptions and the Balance Sheet

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 11-2 1 2 3 4 56 1.Write the date. 3.Record memorandum number. 4.Enter debit amount. 5.Enter the account credited. 6.Enter credit amount. 2.Enter the account debited. JOURNALIZING A STOCK SUBSCRIPTION page 324

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 11-2 1.List intangible assets as the last category of assets. 2.List sources of paid-in capital. BALANCE SHEET OF A NEWLY FORMED CORPORATION page 325 1 2

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 11-2 JOURNALIZING CASH RECEIVED FOR A STOCK SUBSCRIPTION page 326

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 11-2 JOURNALIZING ISSUANCE OF STOCK PREVIOUSLY SUBSCRIBED page 326

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 11-2 TERMS REVIEW subscribing for capital stock intangible assets page 327

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 11-3 Calculating and Journalizing Dividends for a Corporation

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 11-3 TERMS REVIEW declaring a dividend – an action by the board of directors to pay stockholders a portion of its earnings date of declaration – The date that the dividend payment is voted on and approved date of record – The date that determines which stockholders are to received dividends – whoever holds the stock on that date gets the $ date of payment – Date in which dividends are actually to be paid page 332

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 11-3 Calculating Value of Preferred Stock DIVIDENDS page 328 Number of Preferred Shares Par Value= Value of Preferred Stock × 1,000$100.00=$100,000.00 ×

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 11-3 DIVIDENDS page 328 Calculating Value of Common Stock Number of Common Shares Stated Value= Value of Common Stock × 16,000$20.00=$320,000.00 ×

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 11-3 DIVIDENDS page 329 Calculating Dividend of Preferred Stock = × Value of Preferred Stock Preferred Dividend Rate Preferred Dividend Amount $100,000.008%=$8,000.00 ×

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 11-3 DIVIDENDS page 329 Calculating Amount Available for Common Dividends Total Amount Available for Dividends Preferred Dividend Amount = Amount Available for Common Dividends – $24,000.00$8,000.00=$16,000.00 –

21. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 11-3 DIVIDENDS page 329 Calculating Dividend Rate for Common Stock Common Dividend Amount Value of Common Stock = Common Dividend Rate ÷ $16,000.00$320,000.00=5% ÷

22. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 11-3 JOURNALIZING DECLARATION OF DIVIDEND page 330

23. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 11-3 JOURNALIZING PAYMENT OF A DIVIDEND page 330