19
Corporations:
1. Market value represents the price of stock that is bought and sold in the open market. Book
2. Date of declaration, date of record, and date of payment.
4. A company may declare a stock dividend
A. Because it has insufficient cash.
5. Because the amount of Retained Earnings(Dividends) is transferred to Common Stock and
Paid-in Capital in Excess of Par Value--Stock Dividend. All of the accounts are reported in
6. Disagree. Common Stock Dividend Distributable is reported in stockholders’ equity.
7. A stock split does not affect the accounts other than to increase the number of shares
Copyright © 2016 Pearson Education, Inc.
19-2
Value—Common. Thus, the balances of the stockholders’ equity accounts change with a
stock dividend.
8. Reject. Treasury Stock is a contra-stockholders‘ equity account.
10. The account Paid-In Capital from Treasury Stock represents the difference between the
11. Disagree. Appropriations of retained earnings can be voluntary or contractual.
13. Beginning Retained Earnings
+/- Prior Period Adjustments
14. The question in this case is whether Alan should disclose confidential information about a
SOLUTIONS TO CONCEPT CHECKS
1.
(Redemption value
+ Dividends in arrears)
/ Preferred shares
issued
= Book value
Preferred
($ 22,400
+ $ 5,400)
/ 1,400
= $19.86
(Stockholders’ equity
– Amount assigned to
preferred)
/ Common shares
issued
= Book value
Common
($ 291,600
– $ 27,800)
/ 1,600
= $164.88
2.
March 20 Retained Earnings
70,000
Dividends Payable
70,000
April 28
Dividends Payable
70,000
Cash
70,000
3.
Jul. 24
Retained Earnings
3,584
Common Stock Dividend Distributable
1,408
Paid-in Capital in Excess of Par Value-
Stock Dividend
2,176
Aug. 18
Common Stock Dividend Distributable
1,408
Common Stock
1,408
4.
a. Treasury Stock
1,800
Cash
1,800
b. Cash
408
Treasury Stock
288
Paid-in Capital from Treasury Stock
120
c. Cash
95
Paid-in Capital from Treasury Stock
120
Retained Earnings
13
Treasury Stock
228
5.
Retained Earnings(Prior Period Adjustment)
19,000
Accumulated Depreciation
19,000
SOLUTIONS TO SET A EXERCISES
19A-1.
(Redemption value
+ Dividends in arrears)
/ Preferred shares
outstanding
= Book value
Preferred
($ 154,500
+ $ 14,800)
/ 10,300
= $16.44
(Stockholders’ equity
– Amount assigned to
preferred)
/ Common shares
outstanding
= Book value
Common
($ 579,100
– $ 169,300)
/ 41,000
= $10.00
19A-3.
Aug. 5
Retained Earnings
117,180
Common Stock Dividend Distributable
50,220
Paid-in Capital in Excess of Par Value-Stock Div.
66,960
Sept. 6
Common Stock Dividend Distributable
50,220
Common Stock
50,220
19A-4.
April 3
Cash
75,600
Common Stock
32,400
Paid-in Capital in Excess of Par Value – Common
43,200
April 9
Treasury Stock – Common
1,800
Cash
1,800
15
Cash
1,284
Treasury Stock – Common
963
Paid-in Capital from Treasury Stock
321
17
Cash
288
Paid-in Capital from Treasury Stock
144
Treasury Stock – Common
432
EXERCISES (CONTINUED)
19A-5.
THOMAS COMPANY
SOLUTIONS TO SET B EXERCISES
19B-1.
(Redemption value
+ Dividends in arrears)
/ Preferred shares
outstanding
= Book value
Preferred
($ 171,000
+ $ 14,400)
/ 9,500
= $19.52
(Stockholders’ equity
– Amount assigned to
preferred)
/ Common shares
outstanding
= Book value
Common
($ 775,300
– $ 185,400)
/ 41,400
= $14.25
19B-3.
Aug. 5
Retained Earnings
64,260
Common Stock Dividend Distributable
34,020
Paid-in Capital in Excess of Par Value– Stock Div.
30,240
Sept. 6
Common Stock Dividend Distributable
34,020
Common Stock
34,020
19B-4.
April 3
Cash
61,100
Common Stock
18,800
Paid-in Capital in Excess of Par Value – Common
42,300
9
Treasury Stock – Common
1,600
Cash
1,600
15
Cash
1,530
Treasury Stock – Common
816
Paid-in Capital from Treasury Stock
714
17
Cash
282
Paid-in Capital from Treasury Stock
94
Treasury Stock – Common
376
EXERCISES (CONTINUED)
19B-5.
YVETTE COMPANY
SOLUTIONS TO SET A PROBLEMS
PROBLEM 19A-1
a.
(Redemption value
+ Dividends in arrears)
/ Preferred shares
outstanding
= Book value
Preferred
($ 425,100
+ $ 0)
/ 3,900
= $109.00
(Stockholders’ equity
– Amount assigned to
preferred)
/ Common shares
outstanding
= Book value
Common
($ 916,500
– $ 425,100)
/ 6,000
= $81.90
b.
(Redemption value
+ Dividends in arrears)
/ Preferred shares
outstanding
= Book value
Preferred
($ 425,100
+ $ 74,100)
/ 3,900
= $128.00
(Stockholders’ equity
– Amount assigned to
preferred)
/ Common shares
outstanding
= Book value
Common
($ 916,500
– $ 499,200)
/ 6,000
= $69.55
PROBLEM 19A-2
RONDO CORPORATION
GENERAL JOURNAL
PAGE 4
Date
201X
Account Titles and Description
PR
Dr.
Cr.
July
2
Retained Earnings
301
0
0
0
00
Dividends Payable
301
0
0
0
00
Aug.
1
Dividends Payable
301
0
0
0
00
Cash
301
0
0
0
00
4
Retained Earnings
275
2
0
0
00
Common Stock Dividend Distributable
206
4
0
0
00
Paid-in Capital in Excess of Par Value-
68
8
0
0
00
Stock Dividend
Sept.
12
Common Stock Dividend Distributable
206
4
0
0
00
Common Stock
206
4
0
0
00
Oct.
1
Retained Earnings
891
6
4
8
00
Common Stock Dividend Distributable
334
3
6
8
00
Paid-in Capital in Excess of Par Value-
557
2
8
0
00
Stock Dividend
Nov.
2
Common Stock Dividend Distributable
334
3
6
8
00
Common Stock
334
3
6
8
00
Copyright © 2016 Pearson Education, Inc.
19–10
PROBLEM 19A-3
(1)
LONG VIEW CORPORATION
GENERAL JOURNAL
PAGE 3
201X
Account Titles and Description
PR
Dr.
Cr.
June
4
Treasury Stock
31
2
0
0
00
Cash
31
2
0
0
00
21
Retained Earnings
5
0
2
4
00
Dividends Payable
5
0
2
4
00
July
13
Dividends Payable
5
0
2
4
00
Cash
5
0
2
4
00
Sept.
9
Cash
12
5
8
0
00
Treasury Stock
10
2
0
0
00
Paid-in Capital from Treasury Stock
2
3
8
0
00
29
Cash
20
3
0
0
00
Paid-in Capital from Treasury Stock
7
0
0
00
Treasury Stock
21
0
0
0
00
Oct.
12
Retained Earnings
47
7
3
6
00
Common Stock Dividend Distributable
31
8
2
4
00
Paid-in Capital in Excess of Par Value-
Stock Dividend
15
9
1
2
00
Dec.
31
Income Summary
59
0
0
0
00
Retained Earnings
59
0
0
0
00