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Chapter 15: Question 14BE (page 811)
Use the information from BE15-13, but assume Green Day Corporation declared a 100% stock dividend rather than a 5% stock dividend. Prepare the journal entries for both the date of declaration and the date of distribution.
The dividend distributed by Green Day Corporation is $4,000,000.
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(Computation of Retained Earnings) The following information has been taken from the ledger accounts of Isaac Stern Corporation.
Total income since incorporation $317,000
Cash dividends paid 60,000
Total value of stock dividends distributed 30,000
Gains on treasury stock transactions 18,000
Unamortized discount on bonds payable 32,000
Instructions
Determine the current balance of retained earnings.
What features or rights may alter the character of preferred stock?
The following comment appeared in the notes of Colorado Corporation’s annual report: “Such distributions, representing proceeds from the sale of Sarazan, Inc., were paid in the form of partial liquidating dividends and were in lieu of a portion of the Company’s ordinary cash dividends.” How would a partial liquidating dividend be accounted for in the financial records?
(Analysis of Equity Data and Equity Section Preparation) For a recent 2-year period, the balance sheet of Santana Dotson Company showed the following stockholders’ equity data on December 31 (in millions).
2017 | 2016 | |
Additional paid-in capital | \( 931 | \) 817 |
Common stock | 545 | 540 |
Retained earnings | 7,167 | 5,226 |
Treasury stock | 1,564 | 918 |
Total stockholders’ equity | \(7,079 | \)5,665 |
Common stock shares issued | 218 | 216 |
Common stock shares authorized | 500 | 500 |
Treasury stock shares | 34 | 27 |
Instructions
Mary Tokar is comparing a GAAP-based company to a company that uses IFRS. Both companies report equity investments. The IFRS company reports unrealized losses on these investments under the heading “Reserves” in its equity section. However, Mary can find no similar heading in the GAAP-based company financial statements. Can Mary conclude that the GAAP-based company has no unrealized gains or losses on its non-trading equity investments? Explain.
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