1- Issuance of Common Stock : -
A – Common Stock Subscribed:
A/1 Subscription [Journal Entry] :
Dr. Cash (down Payment) xx
Dr. Subscriptions Receivable (balance) xx
Cr. Common Stock Subscribed xx
(Par or stated value)
Cr. APIC (difference) xx

A/2 Collection and Issuance of Shares [Journal Entry] :
Dr. Cash (balance) xx
Cr. Subscriptions Receivable xx

Dr. Common Stock Subscribed xx
(Par or stated value)
Cr. Common Stock xx
(Par or stated value)

Assume that 120 share of bee company are subscribed by d.joe for $12 payable in three installment
Subscriptions Receivable 1440
Common Stock Subscribed 1200
Additional paid in capital 240

To record the receipt of final payment:
Cash 480
Subscriptions Receivable 480

To record issuance of stock:
Common Stock Subscribed 1200
Common Stock 1200

A/3 Issuance of Common (Preferred) Stock [Journal Entry]:
Dr. Cash, Property or Expenses xx
(Fair market value)
Cr. Common (Preferred) Stock xx
(Par or stated value)
Cr. APIC (difference) xx
• Note :-
Common Stock or Preferred Stock should be shown in par or stated
value (legal capital).

A firm issues 10000 shares of common stock par $25for a cash of $26 per share assume beginning balance in retained earning $40000
260000 Cash
Common stock 250000
Additional paid in capital 10000
B- Treasury Stock :
B/1 Acquisition or Purchasing of Shares :

Cost Method Par Value Method
Dr. TS (cost) xx
Cr. Cash xx Dr. TS (par value) xx
Dr. APIC (original amount) xx
Dr. RE (difference) xx
Cr. APIC from TS xx
Cr. Cash xx
In the example above acquisition of 2000 share of treasury stock at $28 per share
Treasury stock 56000 Treasury stock 50000
Cash 56000 additional paid in capital 2000
Retained earnings 4000
Cash 5600

2- Dividends : -
A- Cash Dividends :-
Recorded when declared
A/1 Dividends in arrears to preferred stockholders if cumulative.
A/2 Normal current dividends to preferred stockholders if uncomulative .
A/3 Comparable current dividend to common stockholders.
A/4 Remainder.
• Allocated proportionately to common and preferred stockholders
if preferred stock is participating .
• Paid to common stockholders if preferred stock is nonparticipating

B- Property Dividends :-
 Journal Entry :
Dr. RE (FMV of property) xx
Dr. Acc. Depreciation xx
Cr. Gain or Loss (FMV - NBV) xx
Cr. Asset (at total cost) xx

C- Liquidity Dividends:-
 Journal Entry:
Dr. RE (balance) xx
Dr. APIC (plug) xx
Cr. Cash or Dividends Payable xx

• Note :
It’s not allowed to declare dividends more than APIC
In liquidating dividends.
Assume that dako corporation declares a cash dividend of $40000 & inform the shareholders that 75% are liquidating dividends
Retained earnings 10000
Additional paid in capital 30000
Dividends Payable 40000

Dividends Payable 40000
Cash 40000

D- Stock Dividends:-
 Journal Entry: Stock Dividends at declaration
Dr. RE (FMV of stock issued) xx
Cr. stock dividend distributable xx
Cr. APIC in excess of par xx
At issuance
Dr. Stock dividend distributable xx
Cr. common stock xx
Aspen Corporation has outstanding 10000share of $5par value common stock with a market value of $25 per share. on that date the company declares a 10% stock dividend distributable on 15 July of record on June20
The entry at June 1 to record the declaration.
Retained earnings 250000
Stock dividend distributable 50000
APIC in excess of par 200000
on July 15 the entry to record the distribution .

Stock dividend distributable 50000
Common stock 50000

3- Preferred Stock – Special Issuance :-

B- Convertible Preferred Stock : -
 Journal Entry - Issuance:
Dr. Cash (proceeds) xx
Cr. Preferred Stock (par) xx
Cr. AIPC from Preferred Stock (difference) xx

 Journal Entry – Conversion :
Dr. Preferred Stock (par) xx
Dr. AIPC from Preferred Stock xx
(original amount)
Cr. Common Stock (par or stated) xx
Cr. APIC (difference) xx
Preferred stocks convertible noncumulative par$2 shares outstanding100000......$200000
Additional paid in capital from preferred stocks ......... $ 20000
Common stock par $1shares outstanding 150000.............. $150000
Additional paid in capital from common stocks................ $50000
The conversion privilege one share of common stock for each share of preferred stock. Assume that the share holder's tender10000 shares of preferred stock for conversion.
Preferred Stock 20000
AIPC from Preferred Stock 2000
Common Stock 10000
Additional paid in capital 12000

7- Book Value Per Share : -
Calculation : -
Total Stockholders’ Equity
- Preferred Stock (par value or liquidation preference)
- Dividends in Arrears on Cumulative Preferred Stock
= Stockholders’ Equity attributed to Common Stockholders
÷ Common Shares Issued at Balance Sheet Date
= Book Value per Common Share

Suppose a company total shareholders equity 120 million & has 10 million of common share issued. Reacquired 2 million share as treasury stocks.
10 million share 8% par 1$ cumulative preferred stock. Preferred stocks liquidation preference $3 per share & they are in arrears for 2 years.
Compute the book value per share

Total equity .............. ....... ... ... ............. ........... .. .... .... 120.0
Preferred stock liquidation value... (10million *$3)... 30.0
Preferred stock cumulative dividends in arrears ......... 1.6
Balance applicable to common stocks ................ 88.4
Total common shares outstanding.... (10-2) 8.0
The book value per share of common stock ... ($88.4/80)... 11.05 per share

*Appropriations Expansions

Set up to disclose to financial users future commitments that are not subject to accrual.

 Journal Entry :
Dr. Retained Earnings [RE] xx
Cr. RE Appropriated for …,… xx
When commitment is met, accrued, or avoided the appropriation
Is reversed.
Dr. RE Appropriated for xx
Cr. RE xx
An appropriation for a plant expansion is to be created by transfer from retained earnings of $400000 a year for 5 years. the entry for each year would be:
Retained Earnings 4000000
400000 RE Appropriated for plant expansion

at the end of 5 years would have balance of $200000 if we assume the expansion has been completed the appropriation is no longer required & can be returned to retained earnings
400000 RE Appropriated for plant expansion
Retained Earnings 4000000