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12-62
119.
Income statement and earnings per share
Shown below is information relating to operations of Laconia, Inc., for 2015:
In the space provided, complete the income statement for Laconia, Inc., including earnings-
per-share figures. Laconia has 100,000 shares of a single class of common stock
outstanding throughout the year.
120.
Special sections in an income statement
What is the purpose of arranging an income statement to show subtotals for Income from
Continuing Operations and for Income before Extraordinary Items?
121.
Earnings per share-basic and diluted
Greenwich Corporation had net income of $1,712,500 in 2015. The company had 300,000
shares of $4 par value common stock and 25,000 shares of 8%, $100 par, preferred stock
outstanding throughout the year. Each share of preferred stock is both cumulative and
convertible. Each share of preferred stock is convertible into four shares of common stock.
Compute the following for 2015:
122.
Earnings per share-basic and diluted
Stainless Corporation had net income of $7,800,000 in 2015. The company had 500,000
shares of $4 par value common stock and 70,000 shares of 8%, $100 par, preferred stock
outstanding throughout the year. Each share of preferred stock is both cumulative and
convertible. Each share of preferred stock is convertible into two shares of common stock.
Compute the following for 2015:
(a) The number of shares to be used in computing basic earnings per share.
(b) The number of shares to be used in computing diluted EPS.
(c) Basic earnings per share.
123.
Stock dividend-effect on book value
Olympic Corporation has 75,000 shares of $1 par value stock outstanding. The largest
single stockholder is Lou Cheng, who owns 6,000 shares. On December 31, the total assets
of the company amount to $4,360,000 and total liabilities to $2,230,000. On that date, the
board of directors declared a stock dividend of one new share for each five shares
outstanding. Compute the following:
124.
Stock dividends and stock split-journal entries
Eagle Corporation has 250,000 shares of $6 par value capital stock outstanding. Prepare
journal entries in the space provided to record the following transactions during the current
year:
125.
Equity transactions-journal entries
A partial list of the ledger accounts of Soundview Corporation is shown below, followed by
a list of transactions. Indicate the accounts that would be debited and credited in recording
each transaction by placing the appropriate account number(s) in the space provided. If no
journal entry is required for a particular transaction, use "None."
126.
Retained earnings
At the beginning of 2015, Falcon Corporation had 2 million shares of $2 par value common
stock outstanding and retained earnings of $17 million. During 2015, Falcon earned $12
million, declared a 5% stock dividend when the price of the stock was $19 per share, and
paid a year-end cash dividend of $2.50 per share. (The cash dividend was declared after
the stock dividend had been distributed.) At the end of 2015, what are the company's
retained earnings?
127.
Stock dividend and treasury stock
At the beginning of the current year, King Cole, Inc. had 300,000 shares of capital stock
outstanding and total stockholders' equity of $1,200,000. During the year, the company
earned net income of $325,000, declared cash dividends of $150,000, distributed a 5%
stock dividend of 15,000 shares when the market price of the stock was $16 per share, and
purchased 3,000 shares of treasury stock at a cost of $13 per share. Compute the following
at the end of the current year:
(a) Total stockholders' equity:
(b) Number of shares of stock outstanding:
(c) Book value per share:
128.
Stock dividends
What is the effect of a stock dividend?
129.
Accounting changes and prior period adjustment
Prior period adjustments affect the income of past accounting periods. Explain how prior
period adjustments are shown in the financial statements.
130.
Stockholders' equity
The stockholders' equity section of the balance sheet of Nautilus Corporation at December
31, 2015, appears as follows:
Answer the following questions based on the stockholders' equity section given above.
Each question is a separate situation, unless otherwise indicated.
(a) What is the total dollar amount paid annually as dividends to preferred stockholders?
(b) What was the average issue price per share of preferred stock?
(c) What was the average issue price per share of common stock?
(d) How many shares of common stock are outstanding?
(e) What is the book value per share of the common stock?
(f) If all the treasury stock is reissued at a price of $45 per share, what amount will be
credited to the account Additional Paid-In Capital: Treasury Stock Transactions?
131.
Stockholders' equity
The stockholders' equity section of the balance sheet of Creative Corporation at December
31, 2015, appears as follows:
Answer the following questions based on the stockholders' equity section given above. The
company had no treasury stock transactions before 2015.
(a) What is the average price per share of preferred stock?
(b) How many shares of common stock are outstanding?
(c) A small stock dividend of 5,000 shares was declared and distributed during 2015. What
was the market price per share on the date of declaration?
(d) If Creative Corporation had reacquired 7,000 shares of treasury stock early in 2015,
compute the price per share for which the reissued treasury stock was sold.
(e) Assume all remaining treasury stock is reissued at a price of $12 per share in January of
2015.
Give the journal entry to record this transaction.
132.
MRB Company purchased 1,000 shares of its own outstanding $12 par value common stock
for $16 per share and then sold 400 shares six months later for $19 a share. Prepare the
journal entries for the purchase of the stock and for the sale.
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133.
Baron Corporation was authorized by its charter to issue 80,000 shares of 12%, $100 par
cumulative preferred stock and 200,000 shares of $1 par value common stock. In its first
year of operations, Baron had the following transactions.
(1) Sold 50,000 shares of common stock for $300,000 on January 1.
(2) Sold 3,000 shares of preferred stock for $360,000 on January 1.
(3) Earned $185,000 for the sale of their merchandise of which $135,000 was on credit.
(4) Had expenses of $122,500 in connection with selling the merchandise. All expenses
were paid in cash.
(5) Purchased 5,000 shares of outstanding common stock for $8.00 per share for the
treasury.
(6) Declared a dividend of $.20 per share of common stock and for the amount due the
preferred stock.
(7) Paid the required dividends.
Required:
(a) Prepare the necessary journal entries.
(b) Prepare the stockholders' equity section of the balance sheet.
