LESSON 11-1

1. LESSON 11-1 Starting a Corporation

2. TERMS REVIEW page 322 • Corporation – organization with legal rights of a person and that may be owned by many people • board of directors – group elected by stockholders to run the company • articles of incorporation – written application requesting permission to form a corporation • Charter – Approved articles of incorporation • common stock – stock that does not give owners preference to earnings but does give voting rights • preferred stock – stock that does give owners preference to earnings but no voting rights LESSON 11-1

3. stock certificate – paper that shows number of shares, issue date, certificate number, and name of stockholder par value – value assigned to a share of stock and printed on the stock certificate par-value stock – share of stock that has authorized value printed on it no-par-value stock – share of stock that has no authorized value printed on the stock certificate stated-value stock – no par value stock that is assigned a value by a corporation organization costs – fees and other expenses of organizing a corporation TERMS REVIEW page 322 LESSON 11-1

4. ARTICLES OF INCORPORATION page 315 1 1. Nature of business. 2 2. Types of stock authorized. 3. Initial directors. 3 LESSON 11-1

5. ARTICLES OF INCORPORATION page 316 1 1. Names of incorporators. 2 2. Signatures of incorporators. LESSON 11-1

6. STOCK CERTIFICATES page 317 LESSON 11-1

7. TRANSACTIONS INCURRED WHEN STARTING A CORPORATION page 319 1 2 3 4 5 1. Write the date. 2. Enter the account title. 3. Record the receipt numbers. 4. Write the credit amount. 5. Write the debit amount. LESSON 11-1

8. ORGANIZATION COSTS OF A CORPORATION page 320 LESSON 11-1

9. LESSON 11-2 Stock Subscriptions and the Balance Sheet

10. JOURNALIZING A STOCK SUBSCRIPTION page 324 2 3 1 4 5 6 1. Write the date. 2. Enter the account debited. 3. Record memorandum number. 4. Enter debit amount. 5. Enter the account credited. 6. Enter credit amount. LESSON 11-2

11. BALANCE SHEET OF A NEWLY FORMED CORPORATION page 325 1 2 1. List intangible assets as the last category of assets. 2. List sources of paid-in capital. LESSON 11-2

12. JOURNALIZING CASH RECEIVED FOR A STOCK SUBSCRIPTION page 326 LESSON 11-2

13. JOURNALIZING ISSUANCE OF STOCK PREVIOUSLY SUBSCRIBED page 326 LESSON 11-2

14. TERMS REVIEW page 327 • subscribing for capital stock • intangible assets LESSON 11-2

15. LESSON 11-3 Calculating and Journalizing Dividends for a Corporation

16. TERMS REVIEW page 332 • declaring a dividend – an action by the board of directors to pay stockholders a portion of its earnings • date of declaration – The date that the dividend payment is voted on and approved • date of record – The date that determines which stockholders are to received dividends – whoever holds the stock on that date gets the $ • date of payment – Date in which dividends are actually to be paid LESSON 11-3

17. Number of Preferred Shares Value of Preferred Stock × Par Value = × 1,000 $100.00 = $100,000.00 DIVIDENDS page 328 Calculating Value of Preferred Stock LESSON 11-3

18. Number of Common Shares Value of Common Stock × Stated Value = × 16,000 $20.00 = $320,000.00 DIVIDENDS page 328 Calculating Value of Common Stock LESSON 11-3

19. Value of Preferred Stock Preferred Dividend Rate Preferred Dividend Amount × = × $100,000.00 8% = $8,000.00 DIVIDENDS page 329 Calculating Dividend of Preferred Stock LESSON 11-3

20. Total Amount Available for Dividends Amount Available for Common Dividends Preferred Dividend Amount – = – $24,000.00 $8,000.00 = $16,000.00 DIVIDENDS page 329 Calculating Amount Available for Common Dividends LESSON 11-3

21. Common Dividend Amount Value of Common Stock Common Dividend Rate ÷ = ÷ $16,000.00 $320,000.00 = 5% DIVIDENDS page 329 Calculating Dividend Rate for Common Stock LESSON 11-3

22. JOURNALIZING DECLARATION OF DIVIDEND page 330 LESSON 11-3

23. JOURNALIZING PAYMENT OF A DIVIDEND page 330 LESSON 11-3