Chapter 11 – Reporting and Interpreting Owners’ Equity
80. Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for $50,000 cash.
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
• Net income was $70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value.
• Treasury stock costing $9,000 was sold for $7,000.
How much did Wendell’s total stockholders’ equity increase during the recent year of
operation?
Chapter 11 – Reporting and Interpreting Owners’ Equity
81. Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for $50,000 cash.
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
• Net income was $70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value.
• Treasury stock costing $9,000 was sold for $7,000.
How much did Wendell’s retained earnings increase during the recent year of operation?
Chapter 11 – Reporting and Interpreting Owners’ Equity
82. Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for $50,000 cash.
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
• Net income was $70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value.
• Treasury stock costing $9,000 was sold for $7,000.
How much did Wendell’s contributed capital increase during the recent year of operation?
Chapter 11 – Reporting and Interpreting Owners’ Equity
83. Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for $50,000 cash.
• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
• Net income was $70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value
and a $23,000 market value.
• Treasury stock costing $9,000 was sold for $7,000.
How much did Wendell’s capital in excess of par increase during the recent year of
operation?
84. Which of the following statements is not correct?
Chapter 11 – Reporting and Interpreting Owners’ Equity
85. Which of the following statements is not correct?
86. Which of the following transactions doesn’t result in an increase in stockholders’ equity?
Chapter 11 – Reporting and Interpreting Owners’ Equity
87. Which of the following statements is false?
88. A company purchased treasury stock for $19,000; the treasury stock was initially issued
for $12,000 and had a $5,000 par value. Which of the following statements correctly describes
the effects of the treasury stock purchase?
Chapter 11 – Reporting and Interpreting Owners’ Equity
89. A company purchased 1,000 shares of treasury stock for $38,000 cash; the treasury stock
was initially issued for $24,000 and had a $9,000 par value. Which of the following
statements incorrectly describes the effect of treasury stock purchase?
90. Which of the following statements is correct?
Chapter 11 – Reporting and Interpreting Owners’ Equity
91. Which of the following statements is correct?
92. Atkins Company had 20,000 shares of $5 par value common stock outstanding prior to a
10% common stock dividend declaration and distribution. The market value of the common
stock on the declaration date was $11. Which of the following statements correctly describes
the affect of the common stock dividend and declaration?
Chapter 11 – Reporting and Interpreting Owners’ Equity
93. Katie Company had 40,000 shares of $2 par value common stock outstanding prior to a
40% common stock dividend declaration and distribution. The market value of the common
stock on the declaration date was $10. Which of the following statements incorrectly
describes the affect of the common stock dividend and declaration?
94. Which of the following statements is correct?
Chapter 11 – Reporting and Interpreting Owners’ Equity
95. Which of the following statements correctly describes either the dividend yield or
earnings per share?
96. Which of the following statements incorrectly describes earnings per share?
Chapter 11 – Reporting and Interpreting Owners’ Equity
97. Which of the following is not a primary advantage of a general partnership relative to a
corporation?
98. Which of the following is true about a proprietorship?
Chapter 11 – Reporting and Interpreting Owners’ Equity
99. Which of the following statements is true about a partnership?
100. Which of the following statements is true about partnership accounting?
Chapter 11 – Reporting and Interpreting Owners’ Equity
101. Constance Corporation reported a $750,000 balance in its common stock account at the
end of 2010. The company held 50,000 shares of treasury stock and had 700,000 shares
outstanding. Calculate the par value per share of the company’s common stock.
102. The charter of Delta Corporation specified a maximum of 25,000 shares of common
stock. At the current date, 5,000 shares remain unissued, and 2,000 of the issued shares have
been repurchased and are still held by Delta. Calculate the number of shares issued,
authorized, outstanding, and held in the treasury.
Chapter 11 – Reporting and Interpreting Owners’ Equity
103. DRP, Inc. sold and issued 50,000 shares of its own $50 par value preferred stock for
$110 per share, and 200,000 shares of its no par common stock for $40 per share. Prepare the
required journal entry.
Chapter 11 – Reporting and Interpreting Owners’ Equity
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104. Three dates are described below.
Part A: Name each of the described dates.
Part B: Prepare the journal entry for each date. Assume a $25,000 cash dividend.
Chapter 11 – Reporting and Interpreting Owners’ Equity
Chapter 11 – Reporting and Interpreting Owners’ Equity
105. At the end of 2010, Washington Corporation reported a $40,000 balance in its common
stock account (par value $1 per share). The treasury stock account balance was $720 (cost $6
per share). During 2010, the company declared and paid a cash dividend at $1.50 per share.
Calculate the total amount of the 2010 cash dividend.
Chapter 11 – Reporting and Interpreting Owners’ Equity
11–58
106. Survivor Company was formed on January 1, 2010 by selling and issuing 20,000 shares
of common stock at $15 per share. On December 1, 2010, the company declared a cash
dividend of $10,000 which will be paid in cash on January 15, 2011.
Requirements:
A. Prepare the journal entry to record the sale and issuance of the common stock on January
1, 2010 under each of the following independent assumptions:
1. The common stock has a par value of $10 per share.
2. The common stock was no par with a stated value of $5 per share.
3. The common stock was no par and no stated value.
B. Prepare the journal entry to record the dividend declaration on December 1, 2010.
C. Prepare the journal entry to record payment of the dividend on January 15, 2011.
Chapter 11 – Reporting and Interpreting Owners’ Equity
107. Contrast the economic effects of a cash dividend (declared and paid) with a stock
dividend (declared and issued) on the distributing corporation by completing the following
chart by placing “X” where appropriate.