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Financial Accounting: Weygandt Kimmel
Financial Accounting: Weygandt Kimmel
Chapter 12
Corporations: Organization, Share
Transactions, and Equity
Chapter Outline
Learning Objectives
LO 1 Discuss the major characteristics of a corporation.
LO 2 Explain how to account for ordinary, preference,
and treasury shares.
LO 3 Explain how to account for cash dividends, share
dividends, and share splits.
LO 4 Discuss how equity is reported and analyzed.
President and
Chief Executive
Officer
Treasurer Controller
Delta Robotics
Statement of Financial Position (partial)
Equity
Share capital—ordinary HK$8,000,000
Retained earnings 1,300,000
Total equity HK$9,300,000
Cash 1,000
Share Capital—Ordinary (1,000 x €1) 1,000
Cash 5,000
Share Capital—Ordinary (1,000 x €1) 1,000
Share Premium—Ordinary 4,000
Mead, Ltd.
Statement of Financial Position (partial)
Equity
Share capital—ordinary, HK$50 par value, 100,000
shares issued and outstanding HK$5,000,000
Retained earnings 2,000,000
Total equity HK$7,000,000
Mead, Ltd.
Statement of Financial Position (partial)
Equity
Share capital—ordinary, HK$50 par value, 100,000
shares issued and 96,000 shares outstanding HK$5,000,000
Retained earnings 2,000,000
7,000,000
Less: Treasury stock (4,000 shares) 320,000
Total equity HK$6,680,000
Graber SA
Statement of Retained Earnings
For the Year Ended December 31, 2020
Balance, January 1 €1,050,000
Add: Net income 410,000
1,460,000
Less: Cash Dividends 100,000
Share Dividends 200,000
Balance, December 31 €1,160,000
Equity
Share capital—preference, 9% €100 par value,
cumulative, callable at €120, 10,000 shares
authorized, 6,000 shares issued and outstanding € 600,000
Share capital—ordinary, no-par, €5 stated
value, 500,000 shares authorized,
400,000 shares issued and 390,000 outstanding €2,000,000
Ordinary share dividends distributable 50,000 2,050,000
Share premium—preference 30,000
Share premium—ordinary 1,050,000 1,080,000
Retained earnings (see Note R) 1,160,000
Less: Treasury shares (10,000 shares) 80,000
Total equity €4,810,000
Note R: Retained earnings is restricted for the cost of treasury
shares, €80,000.
(€8,047 + €8,597)
(€1,263 - €0) ÷ = 15.2%
2