Chapter 12

Corporations: Organization,
Capital Stock Transactions,
and Dividends
Accounting, 21st Edition
Warren Reeve Fess

© Copyright 2004 South-Western, a division

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Professor Emeritus of Accounting
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 Objectives
1. Describe the nature of the corporate
After studying this
form of organization.
chapter, you should
2. List the two main sources
be able to: of
stockholders’ equity.
3. List the major sources of paid-in capital,
including the various classes of stock.
4. Journalize the entries for issuing stock.
5. Journalize the entries for treasury stock
transactions.
 Objectives
6. State the effect of stock splits on
corporate financial statements.
7. Journalize the entries for cash
dividends and stock dividends.
8. Describe and illustrate the reporting of
stockholders’ equity.
9. Compute and interpret the dividend
yield on common stock.
Organizational Structure of a Corporation
Stockholders
(owners of corporation stock)

Board of Directors
(elected by stockholders)

Officers
(selected by board of directors)

Employees
 Forming a Corporation
 First step is to file an application of incorporation
with the state.
 Because state laws differ, corporations often organize
in states with more favorable laws.
 More than half of the largest companies are
incorporated in Delaware.
 State grants a charter or articles of incorporation
which formally create the corporation.
 Management and board of directors prepare bylaws
which are operation rules and procedures.
 Forming a Corporation
On January 5, the firm paid the organization
costs of $8,500. This amount includes legal
fees, taxes and licenses, promotion costs, etc.
Jan. 5 Organization Expense 8 500 00
Cash 8 500 00
Paid cost of organizing the
corporation.
 Stockholders’ Equity
Liabilities
Assets
Stockholders’
Stockholders’
Equity
Equity

Stockholders’ Equity = Assets – Liabilities

Represents the stockholders’ share of the total
assets.
 Stockholders’ Equity
Liabilities
There Assets
are two sources
of stockholders’Stockholders’
Stockholders’
equity. Equity
Equity
 Stockholders’ Equity
Liabilities
Assets
Stockholders’
Stockholders’
Equity
Equity

Stockholders’ Equity: 1
Paid-in capital: Stockholder
Common stock $xxxxx investments

Retained earnings xxxx

Total $xxxxx
 Stockholders’ Equity

Liabilities
Assets
Stockholders’
Stockholders’
Equity
Equity

Stockholders’ Equity:
Paid-in capital:
Common stock $xxxxx 2
Retained earnings xxxx Reinvested
Total $xxxxx earnings
Sources of Paid-In Capital
Authorized

Issued

Outstanding

Number of Shares
 Sources of Paid-In Capital
Major Rights that
Accompany Ownership
of a Share of Stock
1. The right to vote in matters
concerning the corporation.
2. The right to share in
distribution of earnings.
3. The right to share in assets on
liquidation.
 Classes of Stockholders
The two primary classes of paid-in capital are
common stock and preferred stock. The
primary attractiveness of preferred stocks is that
they are preferred over common as to dividends.

Preferred Common
Money Stockholders Stockholders
available
for
dividends
 Classes of Stockholders
Common Stock—the basic ownership of stock
with rights to vote in election of directors,
share in distribution of earnings, and purchase
additional shares.
Preferred Stock—A class of stock with
preferential rights over common stock in
payment of dividends and company liquidation.
Nonparticipating Preferred Stock
A nonparticipating preferred stock is limited to a
certain amount. Assume 1,000 shares of $4
nonparticipating preferred stock and 4,000 shares
of common stock and the following:
2005 2006 2007
Net income $20,000 $55,000 $62,000
Amount retained 10,000 20,000 40,000
Amount distributed $10,000 $35,000 $22,000
Nonparticipating Preferred Stock
Amount distributed $10,000 $35,000 $22,000
Preferred dividend
(1,000 shares) 4,000 4,000 4,000
Common dividend
(4,000 shares) $6,000 $31,000 $18,000
Dividends per share:
Preferred $ 4.00 $ 4.00 $ 4.00
Common $ 1.50 $ 7.75 $ 4.50
Cumulative Preferred Stock
So, preferred
dividends are two
years in arrears.
Assume 1,000 shares of $4
cumulative preferred stock
and 4,000 shares of common
stock. No dividends were
paid in 2005 and 2006.
 Cumulative Preferred Stock

On March 7, 2007, the board of directors

declares dividends of $22,000.
 Cumulative Preferred Stock
Preferred Stock Dividends Dividends Paid in 2007
Total dividends paid,
$22,000

$4,000 $4,000
2005
(In arrears) $4,000 $4,000 $10,000
2006
(In arrears) $4,000 $4,000
2007 Preferred Common
(Current dividend) Stock Stock
 Other Sources of Paid-in Capital
On April 20 the city of Moraine donated
land to Merrick Corporation as an incentive
to relocate its headquarters to Moraine.
The land was valued at $500,000.
Apr. 20 Land 500 000 00
Donated Capital 500 000 00
Recorded land donated by the
city of Moraine.
 ISSUING STOCK
Penerbitan /Penjualan Saham
• Dijual tunai
• Dijual dengan pembayaran bertahap
• Ditukar dengan Aktiva non cash
• Ditukar dengan perusahaan ( dalam
penggabungan usaha
 Penerbitan Saham

PT ABC
Saham
 Pada tanggal 1 April 2002 PT. A menjual 4.000 lembar
saham nominal $1/lb dengan harga $45,000

PT A
Saham $45,000
$1

Kas bertambah $ 45,000

Saham yang beredar bertambah $ 4,000
Agio Saham bertambah $ 41,000

Tgl Account Debit Kredit

April 1 Cash $ 45,000
Common Stock $ 4,000
Paid In Capital - C/S $ 41,000
 Pada tanggal 1 April 2002 PT. A menjual 4.000 lembar
saham nominal $1/lb dengan harga $4,000

PT A
Saham $4,000
$1

Kas bertambah $ 4,000

Saham yang beredar bertambah $ 4,000

Tgl Account Debit Kredit

April 1 Cash $ 4,000
Common Stock $ 4,000
 Pada tanggal 1 April 2002 PT. A menjual 4.000 lembar
saham nominal $1/lb dengan harga $3,600

PT A
Saham $3,600
$1

Kas bertambah $ 3,600

Memberi discount $ 400
Saham yang beredar bertambah $ 4,000

Tgl Account Debit Kredit

April 1 Cash $ 3,600
PIC-C/S or R/E $ 400
Common Stock $ 4,000
 Pada tanggal 1 April 2002 PT. A menjual 4.000 lembar
saham tanpa nominal dengan harga $45,000

PT A
Saham $45,000

Kas bertambah $ 45,000

Saham yang beredar bertambah $ ?

Tgl Account Debit Kredit

April 1 Cash $ 45,000
Common Stock $ 45,000
 Pada tanggal 1 November 2002 PT. A menerima order /
pesanan 5.000 lembar saham nominal $1 per lembar
dengan harga $12.5/lembar. Saat itu diterima down
Payment 50 %.

Tgl Account Debit Kredit

2002
Nov.1 Stock Subcription Rec $62,500
Common Stock Subscribed 5,000
PIC 57,500
Cash 31,250
Stock SubcriptionReceivable 31,250
 Pada tanggal 1 Desember 2002 PT. A menerima sisa
harga untuk 2.500 lembar. Selanjutnya diserahkan
2,500 lembar saham ke pemesan.
Tgl Account Debit Kredit
2002
Des. 1 Cash 15,625
Stock Subscription Rec. 15,625
Common Stock Subscribed 2,500
Common stock 2,500
 Bagaimana jika ada yang gagal membayar

1. Seluruh uang yang diterima dikembalikan

2. Seluruh uang yang diterima tidak dikembalikan,
melainkan dianggap kedaluarsa
3. Uang yang diterima dikembalikan setelah dikurangi
dengan jumlah tertentu
4. Pemesan saham diberikan saham sesuai dengan yang
telah dibayar.
 200 lembar saham biasa nominal $0.5/lembar ditukar
dengan tanah. Saham perusahaan diperdagangkan di
bursa dengan harga $50

Saham (200 lb, $0.5/lb, Hg pasar $50/lb)

Perusa-
haan
Tanah

Tgl Account Debit Kredit

2002
Land 10,000
Common Stock 100
PIC-C/S 9,900
 200 lembar saham biasa nominal $0.5/lembar ditukar
dengan tanah. Saham perusahaan tidak
diperdagangkan di bursa sementara itu harga pasar
tanah lebih dapat dipercaya yaitu $12,000
Saham (200 lb, $.5/lb)
Perusa-
haan
Tanah =$12,000

Tgl Account Debit Kredit

2002
Land 12,000
Common Stock 100
PIC-C/S 11,900
 100 lembar saham biasa nominal $.5/lembar
diserahkan ke salah satu karyawan sebagai
pembayaran gaji. Saham perusahaan diperdagangkan
di bursa dengan harga $50/lembar.

Tgl Account Debit Kredit

2002
Salaries Expense 5,000
Common Stock 50
PIC-C/S 4,950
Issuing Stock at No-Par

Some states require that the entire

proceeds from the sale of no-par
stock be treated as legal capital.
Issuing Stock at No-Par
Also, no-par stock may be
assigned a stated value per share.
The stated value is recorded
similar to a par value.
 Issuing Stock with a Stated Value
On March 30, issued 1,000 shares of no-par
common stock at $40; stated value, $25.

Mar. 30 Cash 40 000 00

Common Stock 25 000 00
Paid-in Capital in Excess of
Stated Value 15 000 00
Issued 1,000 shares of no-par
common stock at $36; stated
value, $25.
 Treasury Stock

Saham Perusahaan yang pernah diterbitkan

dan sekarang dibeli kembali oleh
perusaaan
PT. ABC Pemegang saham

PT ABC
Saham

PT ABC
Saham
PT. ABC Pemegang saham

PT ABC
Saham

PT ABC
Saham

PTABC
PT ABC
PT Saham
ABC
Saham
Saham

PT ABC
Saham
AKM-2 Ekuitas

Metode Pencatatan

METODE COST

METODE NILAI
NOMINAL

Margono III-39
 METODE COST

1. Pada saat dibeli, treasury stock dicatat sebesar cost

2. Pada saat treasury stock dijual bandingkan antara harga jual

dengan costnya

A. Harga jual = cost

Selisihnya dicatat sebagai

B. Harga jual > cost
Agio/Paid In Capital

Selisihnya mengurangi
B. Harga jual < cost Agio dan laba ditahan
 PT. ABC menerbitkan 10,000 lembar saham nominal
$1 dengan harga jual $15 per lembar

Kas bertambah 10.000x $15 = $150,000

Modal saham bertambah 10.000x$1 = $10.000
Timbul agio 10.000x ($15-$1) = $140,000

Account Debit Kredit

Cash $150,000
Common Stock $ 10,000
Paid In Capital in Exess of Par $140,000

Agio/Premium= Paid In Capital in Exess of Par

 PT. ABC membeli kembali 1,000 lembar saham
dengan harga beli $40 per lembar

Treasury stock bertambah 1.000x $40 = $40,000

Kas berkurang = $40.000

Account Debit Kredit

Treasury Stock $ 40,000
Kas $ 40,000

Treasury Stok Cash

40,000 40,000
 PT. ABC menjual 200 lembar Treasury Stock
dengan harga jual $50 per lembar

Account Debit Kredit

Cash 10,000
Treasury Stock 8,000
Paid In capital From T/S 2,000

Cost
PT. ABC menjual 500 lembar Treasury Stock dengan harga $34
/lb
Kas bertambah = $17.000
Treasury stock berkurang 500 lembar $ 40 =$20,000
Menerima uang dari pemegang saham $3,000 lebih kecil

Account Debit Kredit

Kas $ 17,000
Paid In Capital- T/S $ 2,000
Retained earning $ 1,000
Treasury stock $ 20,000
Treasury Stok Cash
40,000 $ 8,000 $ 10,000 40,000
PIC-T/S
$ 2,000
 PT. ABC menjual 500 lembar Treasury Stock
dengan harga jual $34 per lembar

Account Debit Kredit

Cash 17,000
Paid In capital From T. Stock 2,000
Retained Earning 1,000
Treasury Stock 20,000
 PT. ABC membatalkan 300 lembar Treasury Stock

Account Debit Kredit

Common Stock 300
Paid In capital in Excess of Par 4,200
Retained Earning 7,500
Treasury Stock 12,000
 PT. ABC membatalkan 300 lembar Treasury Stock

Account Debit Kredit

Common Stock 300
PIC in Excess of Par-C/S 11,700
Treasury Stock 12,000

Cost
 Stock Splits

A corporation sometimes reduces the par or

stated value of their common stock and issues
a proportionate number of additional shares.
This is called a stock split.
 Stock Splits

BEFORE AFTER 5-1

STOCK SPLIT STOCK SPLIT

4 shares, $100 par 20 shares, $20 par

$400 total par value $400 total par value

 Stock Splits
A stock split does not change the balance
of any corporation accounts. However, it
can make the stock more attractive to
investors by reducing the price of a share,
Accounting for Dividends
 Dividends are distributions of
retained earnings to stockholders.
 Dividends may be paid in cash,
stock, or property.
 Dividends, even on cumulative
preferred stock, are never required,
but once declared become a legal
liability of the corporation.
Accounting for Cash Dividends
Corporations generally declare and pay
cash dividends on shares outstanding when
three conditions exist:
1. Sufficient retained earnings
2. Sufficient cash
3. Formal action by the board of directors
Retained Earnings
50,000
Accounting for Cash Dividends
There are three important
dates relating the
dividends.
 Accounting for Cash Dividends
First is the date of declaration.
Assume that on December 1,
Hiber Corporation declares a
$42,500 dividend.
 Accounting for Cash Dividends

Date of Declaration

Dec. 1 Cash Dividends 42 500 00

Cash Dividend Payable 42 500 00
Declared cash dividend.
Accounting for Cash Dividends
The second important date is
the date of record. For Hiber
Corporation this would be
December 11.
Accounting for Cash Dividends
The third important date is the date of
payment. On January 2, Hiber issues
dividend checks.
 Accounting for Cash Dividends

Date of Payment

Jan. 2 Cash Dividends Payable 42 500 00

Cash 42 500 00
Paid cash dividends.
Accounting for Stock Dividends
A distribution of dividends to
stockholders in the form of the
firm’s own shares is called a
stock dividend.
Accounting for Stock Dividends
Stock dividends transfer pro rata shares
of stock to stockholders. Assume
Hendrix Corporation issues a 5% stock
dividend on common stock, $20 par,
2,000,000 shares issued.diketahui harga
pasar saat ini adalah $31
 Accounting for Stock Dividends
Hendrix Corporation, December 15 (before dividend)
Common Stock, $20 par $40,000,000
Paid-in Capital in Excess of Par--Common Stock 9,000,000
Retained Earnings 26,600,000

Dec. 15 Stock Dividends 3,100 000 00

Stock Dividends Distributable 2,000000 00
Paid-in Capital in Excess of
Par—Common Stock 1,100000 00
Declared stock dividend.
 Accounting for Stock Dividends
On January 10, Hendix Corporation issues
the stock. This action increases the number
of shares outstanding by 100,000.

Jan. 10 Stock Dividends Distributable 2,000 000 00

Common Stock 2,000000 00
Issued stocks for the stock
dividend.
Accounting for Stock Dividends
Hendrix Corporation, December 15 (before dividend)
Common Stock, $20 par $40,000,000
Paid-in Capital in Excess of Par--Common Stock 9,000,000
Retained Earnings 26,600,000
$75,600,000

Hendrix Corporation, January 10 (after dividend)

Common Stock, $20 par $42,000,000
Paid-in Capital in Excess of Par--Common Stock 10,100,000
Retained Earnings 23,500,000
$75,600,000
 Financial Analysis and
Interpretation
Use: To Yield
Dividend indicate the rate of return to common
stockholders in terms of dividends
2004 2003
Dividends per share of common $ 0.80 $ 0.60
Market price per share of common $20.50 $13.50

Dividends per Share of Common Stock

Dividend Yield
Market Price per Share of Common Stock
$.60
Dividend Yield, 2006
$13.50 = 4.4%
$.80
Dividend Yield, 2007 = 3.9%
$20.50
 There are two ways to report
stockholders’ equity in the balance
sheet. In Slide 58, each class of
stock is listed first, followed by its
related paid-in capital accounts.
 61
Stockholders’ Equity
Paid-in capital:
Preferred 10% stock, $50 par,
cumulative (2,000 shares
authorized and issued) $100,000
Excess of issue price over par(PIC-P/S) 10,000 $ 110,000
Common stock, $20 par
(50,000 shares authorized, 45,000
issued) $900,000
Excess of issue price over par(PIC C/S) 190,000 1,090,000
From sale of treasury stock 2,000
Total paid-in capital $1,202,000
Retained earnings 350,000
Total $1,552,000
Deduct treasury stock (600 shares at cost) 27,000
Total stockholders’ equity $1,525,000
 Slide 60 shows the second method. Note
that the stock accounts are listed first. The
other paid-in capital accounts are listed as
a single item described as Additional paid-
in capital.
 Stockholders’ Equity
•Contributed capital:
#Preferred 10% stock, cumulative
$50 par (2,000 shares authorized
and issued) $100,000
#Common stock, $20 par
(50,000 shares authorized, 45,000
issued) 900,000
#Additional paid-in capital
- PIC P/S 10,000
- PIC C/S 190,000
- PIC T/S 2,000 202,000
Total contributed capital $1,202,000
•Retained earnings 350,000
Total $1,552,000
•Deduct treasury stock (600 shares at cost) 27,000
Total stockholders’ equity $1,525,000
Chapter 12

The End
 Stock Right, Warrant and
Option
Hak yang diberikan ke para
Right pemegang saham untuk membeli
saham baru
Surat berharga yang dijual oleh
perusahaan /yang melekat pada
Warrant surat berharga lain yang
memberi hak untuk membeli
saham
Opsi untuk membeli saham
Opsi perusahaan dengan harga tertentu
yang diberikan ke officer atau
karyawan
 Stock Right

Tak perlu ada jurnal

 Stock Warrant

Detachable Warrant Non detachable Warrant

Warrant yang dapat Warrant yang tak dapat

dipisahkan dengan dipisahkan dengan
surat berharga lainnya surat berharga lainnya

Warrant dicatat Warrant tak dicatat

tersendiri tersendiri
 DetachableStock Warrant
PT. B menjual 1.000 saham prefent nominal $50/lembar dengan harga
$58/lembar. Pemegang saham Preferrent diberikan warrant untuk
membeli 1,000 lembar saham biasa nominal $2/ lembar dengan harga
$25/lembar. Segera setelah itu harga pasar Saham Preferrent tanpa
warrant $57/lembar, sementara itu warrant diperjualbelikan dengan
harga $3/lembar.

Warrant
S.P $58
$50

Harg Harga saham

a Jual Dialokasikan
$58
Harga warrant
Perbandingan Harga pasar saham dan warrant
 Alokasi Harga Jual dan Jurnal

Warrant= ( 3:60) x $58 = $2,900

Nominal =$ 50,000
Saham = ( 57:60) x $58 = $55,100
Agio = $ 5,100

Account Debit Kredit

Cash 58,000
Preferreed Stock 50,000
PIC in Excess of Par -PS 5,100
Stock Warrant 2,900
Jika warrant diexercise=1.000 lembar
$25, par $2/lembar

Account Debit Kredit

Cash 25,000
Common Stock Warrant 2,900
Common Stock 2,000
PIC In Exess of Par 25,900
 Jika warrant tak diexercise

Account Debit Kredit

Stock Warrant 2,900
PIC From Expired Warrant 2,900
 Stock Option
Opsi untuk membeli saham
perusahaan dengan harga tertentu
yang diberikan ke officer atau
karyawan

Jumlah
opsiTetap

Stock Option

Jumlah opsi
dapat berubah
 Cara pencatatan

Metode nilai Metode

intrinsik Fair Value

Harga Opsi = selisih Harga Opsi =

antara harga pasar ditentukan dengan
saham dengan harga formula tertentu
excercise
 Fixed Option

( Metode nilai intrinsik)

Selisih antara Harga pasar saham saat pemberian

opsi dengan harga beli saham (exercise)
PT. A pada tanggal 1 Januari 2000 memberikan hak opsi
untuk membeli 10.000 lembar saham PT. A dengan
harga $50 per lembar ke pegawai yang tetap bekerja tiga
tahun mulai 1 Januari 2000 s.d. 31 Desember 2002.
Harga Pasar saham pada waktu itu $50.00 per lembar.

Harga opsi =
10.000 x (50-50 = 0

Tidak ada jurnal

Metode Fair Value
 PT. A pada tanggal 1 Januari 2000 memberikan hak opsi
untuk memberli 10.000 lembar saham PT. A dengan
harga $50 per lembar ke pegawai yang tetap bekerja tiga
tahun mulai 1 Januari 2000 s.d. 31 Desember 2002. Opsi
ini memiliki fair value $10 per lembar

Opsi
Karyawan
Perusahaan
Jasa

Nilai opsi/Jasa = 10.000 x $10

= $ 100,000

Nilai opsi = Menunjukkan besarnya nilai jasa

karyawan selama 3 tahun karena mereka harus kerja 3
tahun untuk mendapatkan opsi ini
 Nilai opsi/Jasa = 10.000 x $10
= $ 100,000

1. Timbul Expense selama 3 tahun

2. Timbulan setoran calon pemodal dalam bentuk jasa

Account Debit Kredit

Compensation Expense 33,333
Paid In Capital From Stock Option 3,333
 Opsi yang berubah

• Lihat slide stock based compensation

 Konversi Saham Preferent ke Saham Biasa

Harga jual Prefered Stock Dulu dianggap harga pasar dari

Saham biasa yang sekarang diserahkan

Saham Biasa
Pemegang
PT. A Saham PT. A
Saham Prefrerent
 Konversi Saham Preferent ke Saham Biasa

Harga jual Prefered Stock Dulu dianggap harga pasar dari

Saham biasa yang sekarang diserahkan

Harga jual Harga jual

SP > SP <
Nominal SB Nominal SB

Selisihnya dianggap Selisihnya dibebankan

agio Ke Retained earning
Convertible Preferred Stock

Account Debit Kredit