11 Jan DQ2 Dividend Payments

Week 3 discussion

DQ1 Stockholders’ Equity Section

Review Illustration 18-1 in the downloadable or hard copy text (Chapter 18). This is a detailed sample stockholders’ equity section of the balance sheet for Exposition Corporation. As you can see in the shareholders equity section of the balance sheet, shareholders equity is broken down into paid in capital, retained earnings of accumulated other comprehensive income, and treasury stock. Discuss the items and item descriptions that you find in this section. For example, the first item is preferred stock. What is preferred stock? What makes it different from common stock? How is the dollar amount shown for preferred stock determined? What is par value? Why is the preferred par value set at $10?

DQ2 Dividend Payments

Compare the payment of cash dividends, stock dividends, property dividends, and liquidating dividends. What are the similarities and differences with respect to these types of dividends? Which form of dividend would you recommend if you are the chief financial officer of the company, and why? How does the purchase of treasury stock from existing shareholders affect the shareholders equity section of the balance sheet? Why would a company purchase stock back from existing shareholders?