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Chapter 13: Q22E_2 (page 712)
Eates Corp. issued 8,000 shares of no-par common stock for $13 per share.
Requirements
2. Which type of stock results in more total paid-in capital?
The common stock for $3 per share has more paid-in capital.
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On August 1, Hagino Corporation declared a $1.50 per share cash dividend on its common stock (20,000 shares) for stockholders on record as of August 15. Hagino paid the dividend on August 31. Journalize the entries declaring the cash dividend and paying the dividend.
Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders’ equity
The balance sheet of Goldstein Management Consulting, Inc. at December 31, 2017, reported the following stockholders’ equity:
Common Stock—\(10 Par Value; 350,000 shares
authorized, 32,000 shares issued and outstanding
Paid-In Capital:
160,000
\) 320,000
650,000
Retained Earnings
Total Stockholders’ Equity \( 810,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 330,000
Total Paid-In Capital
During 2018, Goldstein completed the following selected transactions:
Feb. 6 Declared a 15% stock dividend on common stock. The market value of
Goldstein’s stock was \)25 per share.
15 Distributed the stock dividend.
Jul. 29 Purchased 2,300 shares of treasury stock at \(25 per share.
Nov. 27 Declared a \)0.10 per share cash dividend on the common stock outstanding.
Requirements
3. Prepare the stockholders’ equity section of the balance sheet at December 31, 2018.
Preparing an income statement
The following information was taken from the records of Arizona Motorsports, Inc. at November 30, 2018:
Learning Objectives 3, 4
1. Nov. 8 Treasury Stock \(36,000
Learning Objective 5
Net Income \)37,840
Selling Expenses
Administrative Expenses
Income from Discontinued Operations
Cost of Goods Sold
Treasury Stock—Common (1,500 shares)
Net Sales Revenue
\( 95,000
150,000
2,400
470,000
19,500
801,400
Common Stock, \)11 Par Value, 13,500
shares authorized and issued \( 148,500
Preferred Stock, \)2 No-Par Value, 2,000
shares issued 60,000
Income Tax Expense: Continuing
Operations 50,000
Income Tax Expense: Income from
Discontinued Operations 960
Prepare a multi-step income statement for Arizona Motorsports for the fiscal year ended November 30, 2018. Include earnings per share
Vollmer, Inc. had reported the following balances:
December 31, 2019 December 31, 2018
Net Income \( 80,000 \) 60,000
Preferred Dividends 2,000 5,000
Total Stockholders’ Equity 340,000 310,000
Stockholders’ Equity attributable to Preferred Stock 20,000 20,000
Number of Common Shares Outstanding 10,000 14,000
11. Compute Vollmer’s earnings per share for 2019.
12. Compute Vollmer’s price/earnings ratio for 2019, assuming the market price is $40 per share.
13. Compute Vollmer’s rate of return on common stockholders’ equity for 2019.
Computing dividends on preferred and common stock and journalizing
The following elements of stockholders’ equity are from the balance sheet of Sneed Marketing Corp. at December 31, 2017:
800,000
Preferred Stock—4%, \(2 Par Value; 80,000 shares
authorized, 55,000 shares issued and outstanding
Paid-In Capital:
\) 110,000
Stockholders’ Equity
Common Stock—\(0.10 Par Value; 8,750,000 shares
authorized, 8,000,000 shares issued and outstanding
Sneed paid no preferred dividends in 2017.
Requirements
1. Compute the dividends to the preferred and common shareholders for 2018 if total dividends are \)185,000 and assuming the preferred stock is noncumulative. Assume no changes in preferred and common stock in 2018.
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