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ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS ques...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
ch15.doc-CHAPTER 15 STOCKHOLDERS’ E...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
Page 44
Test Bank for Intermediate Accounting, Thirteenth Edition
1.
Jan.
5
10,000 shares of authorized and unissued common stock were sold for $8 per
share.
2.
Jan. 16
Declared a cash dividend of 20 cents per share, payable February 15 to stock-
holders of record on February 5.
3.
Feb. 10
20,000 shares of authorized and unissued common stock were sold for $12 per
share.
4.
March 1
A 30% stock dividend was declared and issued. Market value per share is
currently $15.
5.
April 1
A two-for-one split was carried out. The par value of the stock was to be reduced
to $2.50 per share. Market value on March 31 was $18 per share.
6.
July
1
A 15% stock dividend was declared and issued. Market value is currently $10 per
share.
7.
Aug.
1
A cash dividend of 20 cents per share was declared, payable September 1 to
stockholders of record on August 21.
Instructions
Enter the above events into the following work sheet showing how each event affects the column.
Event No. 1 will serve as an example.
Common Stock
No. of
Total
Paid-in Capital In
Item
Shares Issued
Par Value
Excess of Par
Retained Earnings
Beginning Balance—1/1/11
400,000
$2,000,000
$850,000
$3,000,000
Event #1—Jan. 5
10,000
50,000
30,000
-0-
Balance
410,000
$2,050,000
$880,000
$3,000,000
Event # 2—Jan. 16 (and events 3 through 7)
15 - 44
Page 45
Stockholders’ Equity
Solution 15-144
Event #2—Jan. 16
-0-
-0-
-0-
(82,000)
———————————————————————————————————————————
Balance
410,000
$2,050,000
$880,000
$2,918,000
#3—Feb. 10
20,000
100,000
140,000
-0-
———————————————————————————————————————————
Balance
430,000
$2,150,000
$1,020,000
$2,918,000
#4—March 1
129,000
645,000
-0-
(645,000)
———————————————————————————————————————————
Balance
559,000
$2,795,000
$1,020,000
$2,273,000
#5—April 1
559,000
-0-
-0-
-0-
———————————————————————————————————————————
Balance
1,118,000
$2,795,000
$1,020,000
$2,273,000
#6—July 1
167,700
419,250
1,257,750
(1,677,000)
———————————————————————————————————————————
Balance
1,285,700
$3,214,250
$2,277,750
$596,000
#7—Aug. 1
-0-
-0-
-0-
(257,140)
———————————————————————————————————————————
Balance
1,285,700
$3,214,250
$2,277,750
$338,860
15 - 45
Page 46
Test Bank for Intermediate Accounting, Thirteenth Edition
Pr. 15-145
—Equity transactions.
Foley Corporation has the following capital structure at the beginning of the year:
6% Preferred stock, $50 par value, 20,000 shares authorized,
6,000 shares issued and outstanding
$
300,000
Common stock, $10 par value, 60,000 shares authorized,
40,000 shares issued and outstanding
400,000
Paid-in capital in excess of par
110,000
Total paid-in capital
810,000
Retained earnings
440,000
Total stockholders' equity
$1,250,000
Instructions
(a)
Record the following transactions which occurred consecutively (show all calculations).
1.
A total cash dividend of $90,000 was declared and payable to stockholders of record.
Record dividends payable on common and preferred stock in separate accounts.
2.
A 10% common stock dividend was declared. The average market value of the common
stock is $18 a share.
3.
Assume that net income for the year was $150,000 (record the closing entry) and the
board of directors appropriated $70,000 of retained earnings for plant expansion.
(b)
Construct the stockholders' equity section incorporating all the above information.
Solution 15-145
(a)
1.
Retained Earnings
..................................................................
90,000
Dividends Payable—Preferred ($300,000 × .06)
..........
18,000
Dividends Payable—Common
......................................
72,000
2.
40,000
shares
10%
4,000
shares as stock dividend
$18
$72,000
total dividend
Retained Earnings
..................................................................
72,000
Common Stock Dividend Distributable
........................
40,000
Paid-in Capital in Excess of Par
..................................
32,000
3.
Income Summary
....................................................................
150,000
Retained Earnings
.......................................................
150,000
Retained Earnings
..................................................................
70,000
Retained Earnings Appropriated for Plant Expansion.
70,000
15 - 46
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