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ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
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ch15.doc-CHAPTER 15 STOCKHOLDERS’ E...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
##### Page 35
Stockholders’ Equity
127.
d
Conceptual.
128.
d
Conceptual.
129.
a
\$174,000 – \$32,000 – (900
\$18) = \$125,800.
*130.
c
(\$200,000
.08) + \$8,000 = \$24,000
\$30,000 – \$24,000 = \$6,000.
EXERCISES
Ex. 15-131
—Lump sum issuance of stock.
Parker Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock
for a lump sum of \$72,000 cash.
Instructions
(a)
Give the entry for the issuance assuming the par value of the common was \$5 and the market
value \$30, and the par value of the preferred was \$40 and the market value \$50. (Each
valuation is on a per share basis and there are ready markets for each stock.)
(b)
Give the entry for the issuance assuming the same facts as (a) above except the preferred
stock has no ready market and the common stock has a market value of \$25 per share.
Solution 15-131
(a)
Cash
..............................................................................................
72,000
Common Stock
................................................................
10,000
Paid-in Capital in Excess of Par—Common
......................
44,000
Preferred Stock
................................................................
16,000
Paid-in Capital in Excess of Par—Preferred
....................
2,000
(common \$30 × 2,000
\$60,000
preferred \$50 × 400
20,000
\$80,000
market value
60/80 × \$72,000 =
\$54,000
common
20/80 × \$72,000 =
18,000
preferred
\$72,000
)
(b)
Cash
..............................................................................................
72,000
Common Stock
...................................................................
10,000
Paid-in Capital in Excess of Par—Common
.......................
40,000
Preferred Stock
..................................................................
16,000
Paid-in Capital in Excess of Par—Preferred
.......................
6,000
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##### Page 36
Test Bank for Intermediate Accounting, Thirteenth Edition
Ex. 15-132
—Treasury stock.
For numerous reasons, a corporation may reacquire shares of its own capital stock. When a
company purchases treasury stock, it usually accounts for the stock using the cost method.
Instructions
Explain how a company would account for each of the following:
1.
Purchase of shares at a price less than par value.
2.
Subsequent resale of treasury shares at a price less than purchase price, but more than par
value.
3.
Subsequent resale of treasury shares at a price greater than both purchase price and par
value.
4.
Effect on net income.
Solution 15-132
1.
Treasury stock is debited for the purchase price of the shares even though the purchase price
is less than par value.
2.
Treasury stock is credited for the original cost (purchase price) of the shares, and the excess
of the original cost (purchase price) over the sales price first is debited to paid-in capital from
treasury stock from earlier sales of treasury stock and any remainder then is debited to
retained earnings.
3.
Treasury stock is credited for the original cost (purchase price) of the shares, and the excess
of the sales price over the original cost (purchase price) is credited to paid-in capital from
treasury stock.
4.
There is no effect on net income as a result of treasury stock transactions.
Ex. 15-133
—Treasury stock.
Agler Corporation's balance sheet reported the following:
Capital stock outstanding, 5,000 shares, par \$30 per share
\$150,000
Paid-in capital in excess of par
80,000
Retained earnings
100,000
The following transactions occurred this year:
(a)
Purchased 120 shares of capital stock to be held as treasury stock, paying \$60 per share.
(b)
Sold 90 of the shares of treasury stock at \$65 per share.
(c)
Sold the remaining shares of treasury stock at \$50 per share.
Instructions
Prepare the journal entry for these transactions under the cost method of accounting for treasury
stock.
15 - 36

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