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The Corporate Income Statement and The Statement of Stockholders' Equity
The Corporate Income Statement and The Statement of Stockholders' Equity
12–1
Motorola, Inc.
Motorola had good
earnings in 2005 and
2006 but had a
decrease in revenue
of 15% in 2007
Additionally
Motorola
experienced a large
operating loss of
$553 million in 2007 © Royalty Free/ Corbis
ongoing operations
Net Income
Basic EPS
Weighted - Average Common Shares Outstandin g
$669,000
Basic EPS $3.35 per share
200,000 shares
$669,000
Basic EPS $2.85 per share
235,000 shares
Dividends for nonconvertible preferred stock outstanding
should be subtracted from net income before earnings per
share for common stock are computed.
Copyright © Cengage Learning. All rights reserved. 12–21
Diluted EPS
* Rounded
Comprehensive income
can be shown as part of
the statement of
stockholders’ equity or
in a separate statement
© Royalty Free C Squared Studios/ Getty Images
Balance, December 31, 2010 $600,000 $836,000 $1,444,000 $1,216,800 ($48,000) ($20,000) $4,028,800
Contributed Capital
Common stock, $5 par value, 50,000 shares
authorized, 15,000 shares issued and outstanding $ 75,000
Additional paid-in capital 15,000
Total contributed capital $ 90,000
Retained earnings 450,000
Total stockholders’ equity $540,000
Date of Declaration:
Date of Record:
• No entry is required
• Recall that this date is used to determine the owners of stock who will
receive dividends
Date of Distribution:
Mar. 31 Common Stock Distributable 7,500
Common Stock 7,500
Distributed a stock dividend of 1,500 shares
* Rounded
Total stockholders’ equity is the same before and after a stock dividend
The assets of a corporation are not reduced as they would have been if a
cash dividend had been declared and paid
The proportionate ownership in the corporation of any individual is the
same before and after a stock dividend 12–36
Stock Split
July 15: MUI Corporation’s 15,000 shares of $5 par value common stock
issued and outstanding were split 2 for 1.
Shares outstanding
• Includes common stock distributable
• Does not include treasury stock
The stockholders’ equity of Latte Company on July 31, 20x7, was as follows:
Contributed capital
Common stock, no par value, $6 stated value,
500,000 shares authorized, 300,000 shares
issued and outstanding $1,800,000
Additional paid-in capital 800,000
Total contributed capital $2,600,000
Retained earnings 670,000
Total stockholders’ equity $3,270,000
Required: Record the stock dividend in the general journal on the date of
declaration. Determine the book value per share after the dividend.
$3,270,000
Book Value per Share $9.91 per share
*
330,000 shares
* Rounded