Lecture sheet (9)

Chapter 13
Accounting for Corporation
Corporation

Definition Characteristic

Is a legal entity ,separate

& distinct from its Continuous life
owners Separate Limited Transferability of Ability to
legal liability ownership acquire
existence capital
Corporation Government Additional
Stockholders Board of Management Regulation Taxes
directors Management

-Invest in Apply
stocks Determine
policy Policy
- Elect
,declare
board of dividends,
directors appoint
management

Corporate Capital Charter (Permission)

Paid-in Capital : Authorized Par Value of

Total amount of Retained Earnings: is the Stock :No. of stock(amount
cash & assets paid to net income retained in a stocks to be printed on each
corporation by corporation. issued share)
stockholders in Income Summary Contributed
exchange to capital Retained Earnings Capital= No of
stock. stocks issued x
NB. If Corp. has par value
only one kind of
stock Common
Stock.
No Par Value
Issued Stocks: Sold or
misleading,
transferred
do not indicate the
Treasury : Firms buys
market value.
its own stocks
Called stated value.
Outstanding: issued
,still in circulation in
the stock market.
Issued= Outstanding
+TS
Ex: (1)

Halan Corp. had the following transaction:

Jan 10, Issued 70,000 Common stock for cash at $5 per share, par value $5/share.
Jan 11, Issued 70,000 Common stock for cash at $8 per share, par value $5/share.
July 1,Issued 40,000 Preferred stock for cash at $7 per share, no par value $2/ share.
Required: Journalize the previous transaction .

Ex: (2)

If an attorney 's firm provided services to Slide Corp. for $5000. The Corp. issued 4000 shares, $1 par value for
paying the bill. Journalize.