Lesson Plan 4.2 – Accounting for Earnings and
Distributions
Course Title: Accounting II
Lesson Title: Accounting for Earnings and Distributions
Specific Objective: Understand the concepts, procedures, and applications
on stockholders’ equity, earnings and distributions.
Performance Objectives:



Explain the difference between a cash dividend and stock dividend;
Calculate a corporation’s dividends;
Journalize transactions of a corporation related to declaring and paying
dividends;
 Journalize entries involving treasury stock;
 Journalize entries for the appropriation of retained earnings;
 Define accounting terms related to the lesson.
TEKS: 130.67.c.2:
B – communicate methods to account for the issuance of stock;
D – compute the number of shares of common stock to be issued on the
conversion of convertible preferred stock;
F – understand that internal accounting controls exist to ensure the proper
recording of financial transactions
TAKS Correlations: R1, M10
Preparation
Materials Needed:




Overhead projector
Glencoe’s Textbook, Chapter 10, and Demonstration Problems
Century 21’s Textbook, Chapter 11, Sections 3, and Chapter 12, Section 2
Accounting software and spreadsheet software
Sponge/Focus Activity:

Ask your students to locate five companies that declared a dividend of $1.00
or more.

Exploring the Real World of Business, in Glencoe’s Textbook

A possible end of class activity is as follows:
o Give each student a 3 x 5 card and give them several minutes to
answer “What is the most important item you learned today?” Have
them turn in the 3 x 5 card before they leave class. (You can use
this activity whenever you want feedback on what your students
learned.)
Lesson Plan 4.2 –
Accounting for Earnings and Distributions
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Lesson Content:
See Glencoe’s Textbook, Chapter 10, (pp. 304-323), or Century 21’s Textbook,
Chapter 11, Sections 3, (pp. 310-313), and Chapter 12, Section 2, (pp. 329-332).
Here is an outline:
I.
II.
III.
Dividends and stock splits
A. Dividends
1.
Cash dividends
2.
Stock dividends
B. Stock split
Accounting for treasury stock
A. Treasury stock
1.
Purchasing treasury stock
2.
Selling treasury stock
Accounting for the appropriation of retained earnings
A. Appropriating retained earnings
Teaching Strategies:


Glencoe’s Demonstration Problems.
With the Century 21 textbook, do the Work Together problems together, then
with On Your Own give your students time to do the problem and then go
over the problem with the class.
Assessment:
For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.

From Glencoe’s Textbook Problems
o Guided Practice
 10-1 Calculating Cash Dividends
 10-2 Analyzing a Source Document
 10-3 Analyzing Treasury Stock Transactions
 10-4 Recording Retained Earnings Appropriation
Transactions
o Independent Practice
 10-5 Recording Cash Dividend Transactions
 10-6 Analyzing Stockholders’ Equity Transactions
 10-7 Recording Treasury Stock Transactions10-8
Journalizing Dividend and Treasury Stock Transactions
 10-9 Recording Transactions for Stock Splits, Dividends, and
Treasury Stock
 10-10 Recording Stockholders’ Equity Transactions
 10-11 Calculating Corporate Dividends
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Conducting an Audit with
Alex, Internet Connection, and Workplace Skills
Lesson Plan 4.2 –
Accounting for Earnings and Distributions
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II


o Open Notes and textbook Quiz: Study Guide for Chapter.
From Century 21’s Textbook
o Guided Practice
 Work Together: Calculating and journalizing the dividends
for a corporation
 On Your Own: Calculating and journalizing the dividends for
a corporation
 Work Together: Journalizing treasury stock transactions
 On Your Own: Journalizing treasury stock transactions
o Independent Practice
 11-1 Journalizing transactions for starting a corporation
 11-2 Journalizing transactions for stock subscriptions and
preparing a balance sheet
 12-1 Journalizing capital stock transactions
o Additional Activities: Applied Communication and Cases for Critical
Thinking.
This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York.
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Multimedia:
Century 21’s Teacher Resource CD
Lesson Plan 4.2 –
Accounting for Earnings and Distributions
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II