1 / 9

LESSON 15-3

LESSON 15-3. Preparing a Statement of Stockholder’s Equity. STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION. A corporation’s ownership is divided into units Each unit of ownership in a corporation is known as a share of stock Each stockholder is an owner of a corporation

rmarilyn
Download Presentation

LESSON 15-3

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. LESSON 15-3 Preparing a Statement of Stockholder’s Equity

  2. STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION • A corporation’s ownership is divided into units • Each unit of ownership in a corporation is known as a share of stock • Each stockholder is an owner of a corporation • Owners’ Equity accounts for a corporation normally are listed under a major chart of accounts division titled Stockholders’ Equity LESSON 15-3

  3. STOCKHOLDERS’ EQUITY ACCOUNTS USED BY A CORPORATION • The investment of all stockholders is titled Capital Stock • This would be equivalent to the Capital account in a merchandising business (There are a lot of “owners” in a corporation so we put all their ownership in the account Capital Stock) • The amount earned by a corporation (Net Income) that is not distributed to stockholders as dividends is called Retained Earnings • Retained earnings is equivalent to the Capital account in a merchandising business. The corporation’s ownership portion of earnings • Earnings (Net Income) distributed to stockholders are called dividends • Dividends is equivalent to the Drawing account in a merchandising business LESSON 15-3

  4. SECTIONS OF THE STATEMENT OF STOCKHOLDERS’ EQUITY • A financial statement that shows changes in a corporation’s ownership for a fiscal period is called a statement of stockholders’ equity • A statement of stockholders’ equity contains two major sections • Capital stock • Retained earnings LESSON 15-3

  5. CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY • The amount of capital stock issued as of the beginning of the year is the beginning balance of the capital stock account. • Additional stock transactions are recorded in the general ledger during the fiscal year • The amounts in the capital stock section of the statement of stockholders’ equity are obtained from the general ledger account, Capital Stock • The monetary value assigned to a share of stock & printed on the stock certificate is called par value LESSON 15-3

  6. CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page 461 1 2 3 4 5 1. Heading 2. Capital Stock and Par Value 3. Stock at the beginning of the year – write the number of shares & the dollar amount 4. Stock issued during the year – write the number of shares & the dollar amount 5. Total stock issued at the end of the year LESSON 15-3

  7. RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY • Net income increases a corporation’s total capital. • Some may be retained by the corporation for business expansion • Some may be distributed as dividends to provide stockholders with a return on their investments. • Amounts used to prepare the statement of stockholders’ equity are obtained from the income statement & balance sheet columns of the work sheet LESSON 15-3

  8. 5 6 7 RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page 462 1 3 2 4 1. Retained Earnings 4. Dividends declared 2. Beginning balance 5. Increase in retained earnings 3. Net income after federal income tax 6. Ending balance 7. Total stockholders’ equity LESSON 15-3

  9. TERMS REVIEW page 463 • statement of stockholders’ equity • par value LESSON 15-3

More Related