24. Braco has 40,000 shares of $100 par value common stock outstanding, and 10,000 shares
in the treasury. The number of additional shares that would be issued in a 5% stock dividend is:
25. When a stock dividend is declared and issued:
26. When a company splits its common stock 3 for 1:
27. The principal reason for a company having a common stock split is to:
28. When a firm purchases its own shares as treasury stock:
29. If a firm sells treasury stock for more than its cost:
30. The statement of changes in retained earnings for the year shows:
31. The balance sheet caption for common stock is:
Common stock, $10 par value, 7,000,000 shares authorized, 5,700,000 shares issued, 5,500,000
shares outstanding.
(a.) Calculate the dollar amount that will be presented opposite of this caption.
(b.) Calculate the total amount of a cash dividend of $1.00 per share.
(c.) What accounts for the difference between issued shares and outstanding shares?
32. The balance sheet caption for common stock is:
(a.) Calculate the average price at which the shares were issued.
(b.) If these shares had been assigned a stated value of $10 each, show how the above caption
would be different.
(c.) Calculate the total amount of cash that would be paid to stockholders if a cash dividend of
$1.50 per share were declared.
33. Calculate the annual cash dividends required to be paid for each of the following
preferred stock issuances:
(a.) $2.40 cumulative preferred, no par value; 600,000 shares authorized, 470,000 shares issued,
28,000 shares held as treasury stock.
(b.) 10%, $50 par value preferred; 200,000 shares authorized, 124,000 shares issued and
outstanding.
(c.) 13% cumulative preferred, $40 stated value, $42 liquidating value; 140,000 shares authorized,
92,000 shares issued, 88,000 shares outstanding.
34. Calculate the cash dividends required to be paid for each of the following preferred stock
issuances:
(a.) The semiannual dividend on 11.5% cumulative preferred, $100 par value; 12,000 shares
authorized, issued, and outstanding.
(b.) The total dividends owed to preferred shareholders on $1.50 annual cumulative preferred,
200,000 shares authorized, 170,000 shares issued, and 162,700 shares outstanding. The company
did not pay dividends during the prior two years or during the current year.
(c.) The quarterly dividend on 9.5% cumulative preferred, $70 stated value, $72 liquidating value,
40,000 shares authorized, 30,000 shares issued and outstanding. No dividends in arrears.
35. Using the column headings provided below, show the effect, if any, of the transaction on
each financial statement category by indicating whether it is an addition (+) or subtraction (–)
and by showing the amount in the appropriate column. For the treasury stock column, show the
effects, if any, of the transaction on total stockholders’ equity. Do not show items that affect net
income in the retained earnings column. You should assume that the transactions occurred in the
chronological sequence as indicated.
(1.) Issued 1,200 shares of $60 par value preferred stock in exchange for land and an existing
building that had appraised values of $35,000 and $50,000, respectively.
(2.) Issued 30,000 shares of $10 par value common stock for $24 per share.
(3.) Purchased 1,000 shares of common stock for the treasury at $25 per share.
(4.) Sold 600 shares of the treasury stock purchased in transaction #3 for $30 per share.
(5.) Declared a cash dividend of $1.40 per share on the common stock outstanding, to be paid
early next year.
(6.) Split the common stock 2-for–1.
36. Using the column headings provided below, show the effect, if any, of the transaction on
each financial statement category by indicating whether it is an addition (+) or subtraction (-)
and by showing the amount in the appropriate column. For the treasury stock column, show the
effects, if any, of the transaction on total stockholders’ equity. Do not show items that affect net
income in the retained earnings column. You should assume that the transactions occurred in the
chronological sequence as indicated.
(1.) Issued 300 shares of $90 par value preferred stock in exchange for land that had an
appraised value of $32,000.
(2.) Issued 17,500 shares of $20 par value common stock for $24 per share.
(3.) Purchased 3,800 shares of common stock for the treasury at $20 per share.
(4.) Sold 2,500 shares of treasury stock purchased in transaction #3 for $22 per share.
(5.) Declared a cash dividend of $2.80 per share on the common stock outstanding, to be paid
early next year.
(6.) Declared and issued a 5% stock dividend on the common stock when the market price per
share of common stock was $26.
