Question

7 In some states, a company must set a Par Value to its Common Stock. But the Par Value is not necessarily the Market Value of that Common Stock. Please complete this equation: The Market Price of Common Stock on an Issue Date Par Value + 8 Treasury stock carried in the Equity section as a contra- equity account reflects the price paid for the common stock repurchased. The account is said to report this as a measure. This means that the measure is fixed at the acquisition price paid for the stock and does not vary with each reporting date so long as the Common Stock is held for reissuance. 9 In accounting for a cash dividend, we track three important dates: the declaration date, the record date, and the payment date. At which one of these dates is an accounting entry generally NOT necessary? 10 When dividends-to-our-shareholders are recorded they reduce Retained Earnings. Please state the financial statement where Dividends are NEVER recorded - we have said that Dividends bypass this statement. SIGN CONVENTIONS For each account listed below, please state whether the account balance is usually presented in the Balance Sheet with a positive sign, negative sign or can be presented either way due to the circumstances. (Ignore the instance where the account balance is zero.). 11 Common Stock - Par Value 12 Common Stock - Additional Paid in Capital (APIC) 13 Accumulated Other Comprehensive Income (AOCI) 14 Retained Earnings 15 Noncontrolling Interests 16 The EQUITY Balance in Total Some Opportunities to perform Calculations and demonstrate Journal Entries (a) A series of questions about the Common Stock Cycle 17 A new company is conducting its first round of capital raising. It has no other Common Stock Outstanding. 100,000 shares are issued at a Market Price of S 50 per share. What is the total Equity Capital Contributed? 18 The Common Stock issued in #17 is a PAR VALUE Common Stock because of the requirements of state law. If the PAR VALUE per share is S 10 what will the Common Stock - Par Value line item in the Equity Section 19 What will be the balance in Common Stock - APIC?

Answer 1

11. Common Stock - Par Value :- Account Balance Presented is with Positive sign. Common Stock Par value is something referred to as the common stock's legal capital . Par value per share is generally very small amount which has no connection to the market value per share of stock.

12. Common Stock - Additional Paid in Capital :-  Account Balance Presented is with Positive sign.It neighter can be Negative.Additional paid in Capital is an amount paid by investor above and beyond the par value price of a stock.

13. Accumulated Other Comprehensive Income:- AOCI Can have both Positive or Negative Sign.AOCI includes beginning balance in AOCI plus other Comprehensive Income recorded during the period .

14. Retained Earning :- Retained Earning Can have both Positive and Negative Sign. Negative retained earning can be an indicator of Bankruptcy, since it implies a long term series of losses.

15. Noncontrolling Interest:- Non controlling Interest is a Negative sign. This reflects the balance that was used in the past for Minority Interest.

16.The Equity Balance in Total:- It can have both Positive and Negative sign. When Total Liabilities are greater than Total Assets than it have negative equity balance in total.