📜 Royal Proclamation: The Kingdom of Crestholm has issued shares to fund its treasury. As Royal Treasurer, you must track who owns what and keep the lords from making false claims about the royal coffers.
Please enter your name to begin.
⚖️ Equity
Royal Treasurer | Stockholders' Equity
The Kingdom's Share Structure
Crestholm Kingdom has two classes of shareholders. The Lords and Ladies hold Preferred Stock: they receive their dividend first, before anyone else. The Commoners hold Common Stock: they vote on kingdom matters and share in the growth, but wait their turn for dividends.
Your job: track exactly how many shares exist, who holds them, and what it all means for the royal equity section.
The Royal Target: Understanding Share Counts
The diagram shows how the four share categories nest inside each other. Use the transaction buttons below to watch the counts shift.
1. After the kingdom repurchases 500 shares, what happens to the relationship between Issued and Outstanding shares?
2. The Lords and Ladies (Preferred stockholders) demand their dividends before Commoners receive anything. This is because preferred stock carries which primary advantage?
3. Crestholm's charter authorizes 10,000 shares. Currently 5,000 are issued and 800 are held in treasury. What is the correct number of outstanding shares?
The Royal Equity Ledger
The kingdom's equity section has five components. For each royal transaction, predict whether each component goes UP, DOWN, or stays the SAME. You get 2 points for a correct first selection and 1 point if you need a second try.
Treasury Stock note: Treasury Stock is a contra equity account, meaning its balance is subtracted from total equity. When you repurchase shares, the Treasury Stock balance increases (the deduction grows larger), which causes Total Equity to go down. Use UP/DOWN to predict whether the Treasury Stock balance itself changes.
🎺 HEAR YE, HEAR YE!
The Five Equity Pillars of Crestholm
Common Stock (Par): The par value of shares issued. Usually $0.01, nearly meaningless in modern practice.
APIC (Additional Paid-In Capital): The amount received above par when shares are sold.
Retained Earnings: Accumulated net income kept in the kingdom, not paid out as dividends.
Treasury Stock Balance (contra equity, negative): A running deduction from equity. When this balance increases (UP), the deduction grows and Total Equity falls.
Total Equity: What the commoners and lords actually own together.
Transaction A: Issue 1,000 shares at $12/share (par $0.01)
The kingdom sells 1,000 new common shares to investors at $12 each.
Component
Balance goes...
Transaction B: Declare a cash dividend of $3,000
The Royal Treasurer announces a $3,000 cash dividend. Payment comes later.
Component
Balance goes...
Transaction C: Pay the previously declared cash dividend
The kingdom pays the $3,000 dividend declared in Transaction B.
Component
Balance goes...
Transaction D: Repurchase 400 shares of treasury stock at $15/share
The kingdom buys back 400 of its own shares from the market.
Component
Balance goes...
4. A lord argues: "When Crestholm repurchased its own shares, those shares became a royal asset, like gold in the vault." What is the flaw in this reasoning?
The Court Is Now in Session
Lords, commoners, and advisors have brought equity claims before the Royal Treasurer. First, decide: SUSTAINED (the claim is correct) or OVERRULED (the claim has an error). Then select the best reason for your ruling. Both steps count toward your score.
👑 Lord Pemberton (Preferred Stockholder)
"I voted against the new board members at last month's gathering. As a preferred stockholder, my vote carries extra weight because of our priority status."
🎺 Town Crier (on behalf of the Board)
"HEAR YE! The Board has declared a $5,000 dividend. The commoners should know this dividend comes at no cost to the kingdom. It is simply the company sharing its good fortune!"
🏠 Commoner Aldrich (Common Stockholder)
"I noticed Crestholm's par value is set at $0.01 per share, but our shares are trading at $18. The par value must be wrong. It should reflect what investors are willing to pay."
📝 Royal Advisor Thornwick
"When Crestholm declared the dividend, Retained Earnings decreased. When the dividend was later paid in cash, Retained Earnings decreased again for the same dividend."
Royal Treasurer's Log
Before your final score is revealed, record your thoughts in the Royal Ledger. This is for your own learning, not graded on content.
Reflect on one or both:
Which equity transaction surprised you most, and why did your instinct lead you in the wrong direction?
If a friend asked you why treasury stock reduces equity instead of creating an asset, what would you say?
0 / 40 characters minimum
Royal Treasurer's Final Report
0%
THE ROYAL SEAL IS GRANTED
The Equity Enforcer
"You know who owns what."
⬇️ Download Your Reflection Card
Download your reflection card and submit the file as directed by your instructor. If you earned the badge, it will appear on the card.