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.
“Accumulated other comprehensive income (loss)” includes each of the following items
except
:
32.
“Accumulated other comprehensive income (loss)”:
8-17
33.
“Noncontrolling interest”:
Essay Questions
34.
The balance sheet caption for common stock is:
Common stock, $10 par value, 14,000,000 shares authorized, 11,400,000 shares issued,
11,000,000 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?
35.
The balance sheet caption for common stock is:
Common stock, no par value, 15,000,000 shares authorized, 9,200,000 shares issued,
8,900,000 shares outstanding $1,104,000,000
(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.
36.
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; 300,000 shares authorized, 235,000 shares
issued, 14,000 shares held as treasury stock.
(b.) 10%, $50 par value preferred; 100,000 shares authorized, 62,000 shares issued and
outstanding.
(c.) 13% cumulative preferred, $40 stated value, $42 liquidating value; 70,000 shares
authorized, 46,000 shares issued, 44,000 shares outstanding.
37.
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;
6,000 shares authorized, issued, and outstanding.
(b.) The total dividends owed to preferred shareholders on $1.50 annual cumulative
preferred, 100,000 shares authorized, 85,000 shares issued, and 81,350 shares
outstanding. The company did not pay dividends during the prior two years or during the
current year.
(c.) The quarterly dividend on 9.6% cumulative preferred, $70 stated value, $72 liquidating
value, 20,000 shares authorized, 15,000 shares issued and outstanding. No dividends in
arrears.
38.
Assume that you own 1,700 shares of $10 par value common stock and the company has a
2-for-1 stock split when the market price per share is $52.
Required:
(a.) How many shares of common stock will you own after the stock split?
(b.) What will probably happen to the market price per share of the stock?
(c.) What will probably happen to the par value per share of the stock?
8-23
39.
On March 22, 2016, Amelia, Inc., purchased 500 shares of its own common stock in the
market for $21 per share. On May 19, 2016, the company sold 300 of these shares in the
open market at a price of $24 per share.
Required:
Use the horizontal model (or write the entry) to show the effects on Amelia, Inc.’s
financial statements of:
(a.) The purchase of the treasury stock on March 22, 2016.
(b.) The sale of the treasury stock on May 19, 2016.
8-25
40.
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 2,400 shares of $60 par value preferred stock in exchange for land and an
existing building that had appraised values of $70,000 and $100,000, respectively.
(2.) Issued 15,000 shares of $10 par value common stock for $24 per share.
(3.) Purchased 2,000 shares of common stock for the treasury at $25 per share.
(4.) Sold 1,200 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.
Cash
Other
Assets
Liabilities
Paid-
in
Capital
Retained
Earnings
Treasury
Stock
Net
Income
1.
2.
3.
4.
5.
6.
Retained
Treasury
8-27
41.
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 600 shares of $90 par value preferred stock in exchange for land that had an
appraised value of $64,000.
(2.) Issued 35,000 shares of $20 par value common stock for $24 per share.
(3.) Purchased 7,600 shares of common stock for the treasury at $20 per share.
(4.) Sold 5,000 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.
Cash
Other
Assets
Liabilities
Paid-
in
Capital
Retained
Earnings
Treasury
Stock
Net
Income
1.
2.
3.
4.
5.
6.
