会计英语11.ppt

Factors affecting marketprice of preferred stock: Dividend rate Risk Level of interest rates The return based on the market value is called the “dividend yield.” Market Price of Preferred Stock Factors affecting market price of common stock: Investors’ expectations of future profitability. Risk that this level of profitability will not be achieved. Changes in market value have no impact on the books of the issuer. Market Price of Preferred Stock Total Stockholders’ Equity Number of Common Shares Outstanding Preferred stock and preferred dividends in arrears are deducted from total stockholders’ equity. Book Value Market Value Book Value per Share of Common Stock Ice Cream Parlor Banana Splits On Sale Now 5. Stock Splits Companies use stock splits to reduce market price. Outstanding shares increase, but par value is decreased proportionately. E.g. Assume that a corporation had 5,000 shares of $1 par value common stock outstanding before a 2–for–1 stock split. Increase Decrease No Change No voting or dividend rights Contra equity account When stock is reacquired, the corporation records the treasury stock at cost. Treasury shares are issued shares that have been reacquired by the corporation. 6. Treasury Stock E.g. On May 1, 2005, East Corp. reacquired 3,000 shares of its common stock at $55 per share. Prepare the journal entry for May 1. E.g. On December 3, 2005, East Corp. reissued 1,000 shares of the stock at $75 per share. Prepare the journal entry for December 3. 1,000 shares × $75 = $75,000 1,000 shares × $55 cost = $55,000 7. Stockholders’ Equity - Presentation Part2: Dialogue 资本公积 A: Sometimes I feel the owners’ equity is easy to understand, sometimes not. B: What do you mean? A: Do you know what it includes? B: The owners’ equity includes investors’ actualized primary investment and accumulation fund, surplus fund and undistributed profits. A: Accumulation fund? B: Well, I mean capital reserve. A: Oh, I know, it’s an account specifically