77
78
127) HighRise Company reported the following amounts of contributed capital in its
stockholders’ equity accounts as of January 1, 2019:
$150,000
100,000
Indicate the journal entry to record each of the following transactions by entering the letter code
corresponding to each account that would be debited and credited. Enter the code letter and the
amount of each debit and credit (do not use dollar signs). The transactions, including the
example, are not interrelated.
Accounts
A.
Cash
D.
Additional paid-in
capital
B.
Dividends
payable
E.
Retained earnings
C.
Common stock
F.
Treasury stock
Transaction
Debits
Credits
Code
Amount
Code
Amount
Ex.
Paid a previously declared cash dividend of
$2,000.
B
2,000
A
2,000
1
Dec. 1, 2019–The board of directors declared a
$2 per share cash dividend payment, which
will be paid in 2020.
2.
Dec. 1, 2019–The board of directors declared
(and issued) a 10% stock dividend. At the date
of declaration, the market price per share was
$11.
3.
Dec. 2, 2019–The corporation sold and issued
20,000 shares of its common stock and
received $10 cash per share.
4.
Dec. 28, 2019–The corporation purchased 200
of its own shares at $10 per share.
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128) On January 1, 2019, the stockholders’ equity section of Gibbons Corporation’s balance sheet
reported the following:
Common stock, par $10, authorized
100,000 shares,
issued 10,000 shares
$100,000
Additional paid-in capital
50,000
Retained earnings
160,000
During 2019, the following selected transactions occurred (assume they occurred in the order
given):
April 1
Issued a 10% stock dividend when the
market price was $12.
May 1
200 shares of treasury stock were
purchased at $11 per share.
Sept. 1
Declared and paid a cash dividend of
$19,800.
Dec. 31
Net income was $30,000.
Prepare the stockholders’ equity section of the balance sheet as of December 31, 2019.
issued 11,000 shares; outstanding 10,800 shares
$110,000
Additional paid-in capital
52,000
*Retained earnings
158,200
Less: Treasury stock, 200 shares (at cost)
(2,200)
Total stockholders’ equity
$318,000
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129) On January 1, 2019, the accounts of Mac Corporation showed the following:
Common stock, par $1, authorized
100,000 shares
?
Additional paid-in capital (at $2 per
share)
60,000
Retained earnings
140,000
During 2019, the following transactions occurred which affected stockholders’ equity (in the
order given):
A.
Issued a 100% stock dividend when the
market price was at $5 per share.
B.
Purchased treasury stock, 1,000 shares, at a
total cost of $8,000.
C.
Declared and paid cash dividends, $15,000.
D.
Net income for 2019, $25,000.
The stockholders’ equity section of the balance sheet for the company must be prepared for the
December 31, 2019 balance sheet. The format is provided below with certain amounts missing.
Supply the missing amounts by entering them in the blanks.
Mac Corporation
Stockholders’ Equity (Partial Balance Sheet)
December 31, 2019
Common stock, par $1, 100,000 authorized
shares,
(1a)
(1b)
________ shares issued
________ shares outstanding
(2)
$__________
Additional paid-in capital
(3)
$__________
Retained earnings
(4)
$__________
(5)
Treasury stock, __________ shares, at cost
(6)
$__________
Total stockholders’ equity
(7)
$__________
83
130) During 2020, Sanders Corporation prepared the following journal entry to record the
declaration and payment of a cash dividend:
Retained earnings (for common
stock dividend)
10,000
Retained earnings (for preferred
stock dividend)
3,600
Cash
13,600
The total par values of common and preferred stock outstanding were $55,000 and $40,000,
respectively. No dividends were declared or paid during 2019.
There are 7,500 shares of common stock held in treasury.
The common stock has a par value of $2 per share.
A. If the preferred stock is noncumulative, calculate the current dividend rate on the preferred
stock.
B. Calculate the number of common stock shares that received dividends.
C. Calculate the dividend paid per share of common stock.
84
131) Wedge Corporation has the following capital stock outstanding:
$1 par value common stock, 250,000 shares.
8% preferred stock, par $100, 5,000 shares, cumulative, with 2 years in arrears.
Cash dividends of $150,000 were declared and paid near the end of the current year.
A. Calculate the dividends paid to the preferred stockholders.
B. Calculate the dividends paid to the common stockholders.
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132) Marlin, Inc., declared a cash dividend of $40,000 in 2019 when the following stocks were
outstanding:
$300,000
25,000
No dividends were declared or paid during the prior year.
Compute the amount of cash that would be paid to each stockholder group under each of the
following separate cases.Show the amount of current dividend and dividends paid in arrears
wherever applicable.
Case A
The preferred stock is
noncumulative.
Preferred:
$_______
Common
$______
Case B
The preferred stock is
cumulative.
Preferred:
$_______
Common
$______
Current
Total
Current
Arrears
Total
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133) DRP, Inc. issued 50,000 shares of its own $50 par value preferred stock for cash of $110
per share, and issued 200,000 shares of its no-par common stock for cash of $40 per share.
Prepare the required journal entries for the issuance of each class of stock.
87
134) For the listed items below, identify the effects on cash flow from financing activities as
increasing (I), decreasing (D), or (N) having no effect on financing cash flows:
Effect on Financing
Cash Flows
Issued previously unissued
shares of common stock
Cash dividend
Repurchase of common shares
for treasury
Stock split
Reissuance of treasury shares
Stock dividend
Issued previously unissued
shares of common stock
Cash dividend
Repurchase of common shares
for treasury
Stock split
Reissuance of treasury shares
Stock dividend
88
135) Determine the effect of the following transactions on the financial statement components
identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component.
B: If the transaction results in a decrease in the financial statement component.
C. If the transaction does not affect the financial statement component.
Transaction 1: Common stock was sold at a price in excess of par value.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 2: Treasury stock was purchased using cash.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 3: Treasury stock was resold for cash at a price less than the treasury stock’s cost.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 4: Treasury stock was resold for cash at a price greater than the treasury stock’s cost.
Net income _____
Total assets _____
Stockholders’ equity _____
90
136) Determine the effect of the following transactions on the financial statement components
identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component.
B: If the transaction results in a decrease in the financial statement component.
C. If the transaction does not affect the financial statement component.
Transaction 1: A cash dividend was declared.
Net income _____
Total assets _____
Total liabilities ______
Stockholders’ equity _____
Transaction 2: A previously declared cash dividend was paid.
Net income _____
Total assets _____
Total liabilities ______
Stockholders’ equity _____
Transaction 3: A 2-for-1 stock split was declared and distributed.
Net income _____
Total assets _____
Total liabilities _____
Stockholders’ equity _____
Transaction 4: A common stock dividend was declared and distributed.
Net income _____
Total assets _____
Total liabilities _____
Stockholders’ equity _____
92
1. D and J each contribute cash into the partnership in exchange for capital.
2. D makes a cash withdrawal from the partnership.
3. Partnership net income is allocated to the partners’ capital accounts.
4. D’s drawing account is closed.
Answer: