Lợi nhuận để lại cho thấy số tiền thu nhập được tích lũy từ khi bắt đầu cuộc sống của công ty cho đến nay. Lợi nhuận để lại đại diện cho một yêu cầu bồi thường về tài sản, nhưng nó không phải là tiền mặt. | Retained Earnings, Treasury Stock, and the Income Statement Chapter 14 Retained Earnings and Dividends Retained Earnings shows the amount of income allowed to accumulate from the beginning of the corporation’s life to the present. Retained Earnings represents a claim on assets, but it is not cash. Retained Earnings and Dividends The balance in the Income Summary account is closed to Retained Earnings at period end. Dividends are distributions to the stockholders. To declare dividends there must be adequate retained earnings. Objective 1 Account for Stock Dividends. Stock Dividends What are stock dividends? They are a proportional distribution of a corporation’s own stock to shareholders. They do not change total stockholders’ equity. A stock dividend is a transfer of retained earnings to contributed capital. Small Stock Dividend Example The dividend is valued at the product of the number of shares distributed times the market price at declaration date. San Diego Company, with 300,000 | Retained Earnings, Treasury Stock, and the Income Statement Chapter 14 Retained Earnings and Dividends Retained Earnings shows the amount of income allowed to accumulate from the beginning of the corporation’s life to the present. Retained Earnings represents a claim on assets, but it is not cash. Retained Earnings and Dividends The balance in the Income Summary account is closed to Retained Earnings at period end. Dividends are distributions to the stockholders. To declare dividends there must be adequate retained earnings. Objective 1 Account for Stock Dividends. Stock Dividends What are stock dividends? They are a proportional distribution of a corporation’s own stock to shareholders. They do not change total stockholders’ equity. A stock dividend is a transfer of retained earnings to contributed capital. Small Stock Dividend Example The dividend is valued at the product of the number of shares distributed times the market price at declaration date. San Diego Company, with 300,000 shares of $2 par value common stock outstanding, declares a 15% stock dividend when the shares are trading at $20. Small Stock Dividend Example How much stock do the shareholders receive? 300,000 × 15% = 45,000 shares 45,000 at $20 per share = $900,000, and 45,000 at $2 per share = $90,000 What is the entry when the dividend is distributed? Small Stock Dividend Example Retained Earnings 900,000 Common Stock 90,000 Paid-in Capital in Excess of Par 810,000 15% common stock dividend distributed Stock Split This is an increase in the number of authorized, issued, and outstanding shares. It is a reduction in the par value. The market value is usually affected proportionately. Stock Split A 5-for-1 stock split means that the company would have five times as many shares outstanding after the split as it had before. Each share’s par value would be divided by five. Stock Split Example Prior to a 5-for-1 split, San Diego Company had 500,000 shares of $10 par common stock authorized and 100,000 .
