76. Bravo Bistro, Inc.
The stockholders’ equity section of the December 31, 2011, balance sheet for Bravo Bistro appeared as follows:
Comm
on
stock,
$3 par,
2,000
shares
issued
and
outstan
ding
$ 6,000
Additio
nal
paid-in
capital
1,000
Retaine
d
earning
s
5,400
Total stockholders’ equity
$12,400
Assume that all of the 2,000 shares of Bravo’s stock that was issued as of December 31, 2011, was issued for $3.50 per share. On March 1, 2012,
Bravo reacquired 1,000 shares of its common stock for $4.50 per share.
Refer to the information presented above for Bravo Bistro, Inc. If all of the 1,000 shares that Bravo Bistro repurchased on March 1 were later
reissued for $5.00 per share, the journal entry to record this transaction includes a debit to what account and for what amount?
77. Murton Industries
Murton Industries, Inc. reported the following information on its recent balance sheet.
Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding
Refer to the information for Murton Industries. What is the effect on Murton’s accounting equation of issuing
1,000 additional shares of common stock at $15 per share?
78. Murton Industries
Murton Industries, Inc. reported the following information on its recent balance sheet.
Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding
Refer to the information for Murton Industries. What is the effect of a 10% stock dividend if the market price
of the common stock is $30 per share when the stock dividend is declared?
79. Murton Industries
Murton Industries, Inc. reported the following information on its recent balance sheet.
Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding
Refer to the information for Murton Industries. What is the effect of a 2-for-1 stock split if the market value of
the common stock is $20 per share at the time the stock split is declared?
80. Coral Cleaners, Inc.
Coral Cleaners reported the following information in the stockholders’ equity section of its December 31, 2011,
balance sheet.
7% Cumulative, non-participating preferred stock, $100 par, 500
shares authorized, issued, and outstanding, callable at par value
$ 50,000
Common stock, $12 par, 100,000 shares authorized
600,000
Additional paid-in capital
25,000
Retained earnings
825,000
Refer to the information presented above for Coral Cleaners, Inc. Coral’s total capital stock is:
81. Coral Cleaners, Inc.
Coral Cleaners reported the following information in the stockholders’ equity section of its December 31, 2011,
balance sheet.
7% Cumulative, non-participating preferred stock, $100 par, 500
shares authorized, issued, and outstanding, callable at par value
$ 50,000
Common stock, $12 par, 100,000 shares authorized
600,000
Additional paid-in capital
25,000
Retained earnings
825,000
Refer to the information presented above for Coral Cleaners, Inc. What is the number of shares of common stock issued and outstanding?
82. Coral Cleaners, Inc.
Coral Cleaners reported the following information in the stockholders’ equity section of its December 31, 2011,
balance sheet.
7% Cumulative, non-participating preferred stock, $100 par, 500
shares authorized, issued, and outstanding, callable at par value
$ 50,000
Common stock, $12 par, 100,000 shares authorized
600,000
Additional paid-in capital
25,000
Retained earnings
825,000
Refer to the information presented above for Coral Cleaners, Inc. If Coral repurchased 500 shares of its common stock for $20 per share, what is the
amount of total stockholders’ equity after this transaction?
83. Melisch, Inc.
The following information is available pertaining to the stockholders’ equity accounts for Melisch, Inc.
Comm
on
stock,
$7 par,
100,00
0
shares
authori
zed
$700,000
Additio
nal
paid-in
capital
160,000
Retaine
d
earning
s
??
Treasur
y stock,
2,000
shares
at cost
(16,000)
Total Stockholders’ Equity
$974,000
Refer to the information presented above for Melisch, Inc. What is the amount of Melisch’s retained earnings?
84. Melisch, Inc.
The following information is available pertaining to the stockholders’ equity accounts for Melisch, Inc.
Common stock, $7 par, 100,000 shares authorized
Additional paid-in capital
Retained earnings
Treasury stock, 2,000 shares at cost
$974,000
Refer to the information presented above for Melisch, Inc. How many shares of common stock are outstanding?
85. Wolfgang, Inc.
Selected data from the financial statements of Wolfgang, Inc. are presented below.
2012
2011
Net income
$ 150,000
$ 120,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
15
14
Purchases of treasury stock
100,000
-0-
Common stockholders’ equity
1,780,000
1,637,000
Average number of common shares outstanding
104,000
95,000
Refer to the information presented above for Wolfgang, Inc. Wolfgang’s 2012 earnings per share is reported as
86. Wolfgang, Inc.
Selected data from the financial statements of Wolfgang, Inc. are presented below.
2012
2011
Net income
$ 150,000
$ 120,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
15
14
Purchases of treasury stock
100,000
-0-
Common stockholders’ equity
1,780,000
1,637,000
Average number of common shares outstanding
104,000
95,000
Refer to the information presented above for Wolfgang, Inc. Wolfgang’s 2012 return on equity is reported as:
87. Wolfgang, Inc.
Selected data from the financial statements of Wolfgang, Inc. are presented below.
2012
2011
Net income
$ 150,000
$ 120,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
15
14
Purchases of treasury stock
100,000
-0-
Common stockholders’ equity
1,780,000
1,637,000
Average number of common shares outstanding
104,000
95,000
Refer to the information presented above for Wolfgang, Inc. Wolfgang’s 2012 dividend yield is reported as
88. Wolfgang, Inc.
Selected data from the financial statements of Wolfgang, Inc. are presented below.
2012
2011
Net income
$ 150,000
$ 120,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
15
14
Purchases of treasury stock
100,000
-0-
Common stockholders’ equity
1,780,000
1,637,000
Average number of common shares outstanding
104,000
95,000
Refer to the information presented above for Wolfgang, Inc. Wolfgang’s 2012 dividend payout ratio is reported as:
89. Ark, Inc.
Selected data from the financial statements of Ark, Inc. are presented below.
2012
2011
Net income
$110,000
$123,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
16.00
13.00
Average number of common shares outstanding
140,000
140,000
Refer to the information presented above for Ark, Inc. Ark’s 2012 dividend yield ratio is reported as:
90. Ark, Inc.
Selected data from the financial statements of Ark, Inc. are presented below.
2012
2011
Net income
$110,000
$123,000
Cash dividends paid on common stock
42,000
38,000
Market price per share of common stock
16.00
13.00
Average number of common shares outstanding
140,000
140,000
Refer to the information presented above for Ark, Inc. Ark’s 2010 dividend payout ratio is reported as:
91. Max’s Tire Center Company
Selected data from the financial statements of Max’s Tire Center are provided below.
2012
2011
Total stockholders’ equity
$ 350,000
$ 278,000
Current liabilities
45,000
42,000
Total liabilities & stockholders’ equity
500,000
490,000
Cash flow from operations
350,000
290,000
Net sales
370,000
360,000
Capital expenditures
150,000
130,000
Refer to the selected data provided for Max’s Tire Center. Which of the following would result from a horizontal analysis of Max’s total
stockholders’ equity in 2012?
92. Max’s Tire Center Company
Selected data from the financial statements of Max’s Tire Center are provided below.
2012
2011
Total stockholders’ equity
$ 350,000
$ 278,000
Current liabilities
45,000
42,000
Total liabilities & stockholders’ equity
500,000
490,000
Cash flow from operations
350,000
290,000
Net sales
370,000
360,000
Capital expenditures
150,000
130,000
Refer to the selected data provided for Max’s Tire Center. Which of the following would result from a vertical analysis of Max’s total stockholders’
equity in 2012?
93. Fred’s Car Repair Service
Selected data from the financial statements of Fred’s Car Repair Service are provided below.
2012
2011
Total stockholders’ equity
$ 350,000
$ 265,000
Current liabilities
75,000
72,000
Total liabilities & stockholders’ equity
600,000
590,000
Cash flow from operations
250,000
190,000
Net sales
570,000
560,000
Capital expenditures
110,000
60,000
Refer to the selected data provided for Fred’s Car Repair Service. Which of the following would result from a horizontal analysis of Fred’s total
stockholders’ equity in 2012?
94. Fred’s Car Repair Service
Selected data from the financial statements of Fred’s Car Repair Service are provided below.
2012
2011
Total stockholders’ equity
$ 350,000
$ 265,000
Current liabilities
75,000
72,000
Total liabilities & stockholders’ equity
600,000
590,000
Cash flow from operations
250,000
190,000
Net sales
570,000
560,000
Capital expenditures
110,000
60,000
Refer to the selected data provided for Fred’s Car Repair Service. Which of the following would result from a vertical analysis of Fred’s total
stockholders’ equity in 2012?
95. The stockholders’ equity accounts of Jamison Corporation include $37,500 of common stock with a par
value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. The total number of shares
outstanding for Jamison Corporation are:
96. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that
60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares
outstanding?
97. Dalmatian Enterprises, Inc. reported the following information as of December 31, 2012:
Common stock, $4 par, 12,000 shares authorized, issued and
outstanding
$ 48,000
Additional paid-in capital
108,000
Total capital stock
156,000
Retained earnings
60,000
Total stockholders’ equity
$216,000
A)
If Dalmatian issued a 4-for-1 stock split on December 31, 2012, would the par value increase, decrease, or remain the same?
B)
If cash dividends were declared on January 10, 2013, at $2 per share, by how much would retained earnings decrease as a result?
Assume that the 4-for-1 stock split occurred.
Par value would be cut in fourth because the number of shares would quadruple. The resulting (new) par value would be $1 per
share.
48,000 shares ´ $2 dividend = $96,000 decrease in retained earnings.
98. Meyer’s Markets, Inc. reported the following information at January 1, 2012:
Common stock, $1 par, 100,000 shares authorized, 50,000 shares issued
and outstanding
$50,000
During 2012, the following transactions occurred:
June 10
Repurchased 1,000 shares of its outstanding common stock for $10 per share.
July 1
Reissued 500 shares of treasury stock for $11 per share.
September 1
Reissued 500 shares of treasury stock for $8.50 per share.
Prepare the journal entries that Meyer needs to record for each of these 2012 transactions.
99. Consider the following information from the financial statements of Renner-Stephens, Inc.:
2012
2011
Total stockholders’ equity
$44,550
$41,900
Net income
10,002
Stock price per share
113
Dividends
521
Purchases of treasury stock
8,061
Average shares outstanding
400
Dividends per share
1.30
100. Consider the following information from the financial statements of Prosser-Phelps, Inc.:
2012
2011
Total stockholders’ equity
$59,050
$55,900
Net income
22,000
Market price per share
120
Dividends
611
Purchases of treasury stock
9,000
Average shares outstanding
550
Dividends per share
1.11
Cash
10,000
July 1
Cash
5,500
Treasury Stock
5,000
Additional Paid-In Capital
Sept. 1
Cash
4,250
Capital
Earnings
Treasury Stock
5,000
101. Consider the following information from the financial statements of Hester Mining, Inc.:
2012
2011
Total stockholders’ equity
$74,400
$65,200
Net income
20,402
Market price per share
93
Dividends
621
Purchases of treasury stock
5,060
Average shares outstanding
800
Dividends per share
0.78
Calculate the following financial ratios for Hester Mining
A)
Return on equity
B)
Earnings per share
C)
Dividend yield
D)
Dividend payout
A)
$20,402 (Net income) / ((74,400 + 65,200) / 2) (Average stockholders’ equity) = .2923 or 29.23%
B)
$20,402 (Net income) / 800 (Average shares outstanding) = $25.50 per share
C)
$0.78 (Dividends per share) / 93 (Market price per share) = .008387 or 0.84%
D)
$621 (Dividends) / 20,402 (Net income) = .03044 or 3.04%
102. The stockholders’ equity accounts of Druthers, Inc. were as follows at December 31, 2012:
Common stock, $1 par, 20,000 shares authorized, 4,000 shares issued and
outstanding
$ 4,000
Additional paid-in capital
20,000
Retained earnings
50,000
The market price of Druthers’ stock was $8 per share at December 31, 2012.
A)
What journal entry will be required to record the distribution of a 20% stock dividend on December 31, 2012?
B)
What balance will be in the retained earnings account immediately following the stock dividend?
C)
Prepare the stockholders’ equity section of Druthers’ balance sheet.
Dividend yield:
$1.11 (Dividends per share) / 120 (Market price per share) = .0093 or 0.93%
Dividend payout ratio:
$611 (Dividends) / 22,000 (Net income) = .0277 or 2.78%
103. Markus Industries is authorized by its corporate charter to issue 10,000 shares of preferred stock with a 7%
dividend rate and a par value of $10 per share, and 25,000 shares of common stock with a par value of $2 per
share. On January 15, 2011, Markus issued 400 shares of its preferred stock for $14 per share and 5,000 shares
of common stock for $2.50 per share.
A)
How much total cash did Markus raise through the January 15, 2011, stock issuances?
B)
Prepare the journal entries necessary to record these stock issuances
Cash
4,000
Cash
10,000
2,500
A)
Retained Earnings*
6,400
Common Stock**
Additional Paid-In Capital***
5,600
(4,000 ´ 20%) ´ $1 par = $800
***
(4,000 ´ 20%) ´ ($8 market – $1 par) = $5,600
$50,000 – 6,400 = $43,600
Partial Balance Sheet
issued and outstanding
$ 4,800
Additional paid-in capital
25,600
Retained earnings
43,600
Total stockholders’ equity
$74,000
104. Rogan Contractors, Inc. had the following information pertaining to its stockholders’ equity accounts as of
December 31, 2012:
Common stock, $5 par, 50,000 shares issued and outstanding
$250,000
Additional paid-in capital
250,000
Retained earnings
150,000
Before the financial statements were prepared On December 1, 2012, Rogan repurchased 5,000 shares of its common stock for $10 per share.
A)
At the end of 2012, what amount will be reported on Rogan’s balance sheet for Treasury Stock?
B)
At the end of 2012, what is the number of outstanding shares of stock?
C)
What is the amount of total stockholders’ equity to be reported on Rogan’s December 31, 2012, balance sheet?
105. Besslin Industries was incorporated on January 1, 2012. Its corporate charter provided for a maximum of
1,000,000 shares of common stock to be sold in the future of the corporation. Besslin sold 25,000 shares to the
public in January and an additional 15,000 shares were sold in October. In November, 15,000 of the issued
shares were bought back by the corporation. Complete the table below regarding the determination of share
quantities for Besslin at the end of 2012.
Quantities:
Authorized shares
Issued shares
Outstanding shares
Treasury shares
Quantities:
Authorized shares
1,000,000
Issued shares
40,000
Outstanding shares
25,000
Treasury shares
15,000
A)
5,000 shares ´ $10 cost = $50,000
C)
Common stock
$250,000
Additional paid-in capital
250,000
Retained earnings
150,000
Treasury stock
(50,000)
Total
$600,000
106. Gipper’s Wholesale, Inc. reported the following information at December 31, 2012:
Common stock, $1 par, 100,000 shares authorized
$ 80,000
Additional paid-in capital
60,000
Total capital stock
$140,000
Retained earnings
40,000
Less: Treasury stock (2,000 common shares at cost)
20,000
Total stockholders’ equity
$160,000
Answer the following questions for Gipper’s Wholesale:
A)
How many shares of common stock are issued?
B)
How many shares of common stock are outstanding?
C)
Assuming that all shares were sold at the same price, what was the original selling price per share?
D)
If the company declared a 2-for-1 stock split on December 31, 2012, describe the resulting change, if any, in the amount of Gipper’s
capital stock accounts and the par value of the common stock.
107. Throughout the years 2009 to 2011, Bennington Town Center, Inc. had the following capital structure:
8% Preferred stock, $10 par, 10,000 shares authorized, 5,000 shares issued
and outstanding
$50,000
Common stock, $2 par, 25,000 shares authorized, 20,000 shares issued and
outstanding
40,000
Additional paid-in capital:
Preferred stock
60,000
Common stock
80,000
Total capital stock
The board of directors of Bennington Town Center determined the total amount available for dividends in each year from 2009 through 2011 as
shown in the following table. Complete the table to indicate the portion of the dividend allocated to preferred and common stockholders in each year.
Assume that the preferred stock is noncumulative and nonparticipating.
Amount Available
Year
for Dividends
Preferred Dividends
Common Dividends
2009
$8,000
2010
$5,000
2011
$3,000
A)
$80,000 / 1 par = 80,000 shares
80,000 shares issued – 2,000 treasury shares = 78,000 shares
C)
$140,000 contributed capital / 80,000 shares issued = $1.75 per share
108. Hingutt Cove Corporation has issued 4,000 shares of common stock, all of the same class; 3,500 shares are
outstanding and 500 shares are held as treasury stock. On August 15, 2012, Hingutt Cove’s board of directors
declared a cash dividend of $2.50 per share, payable on September 15, 2012, to stockholders of record on
August 31, 2012.
Prepare the required journal entries for August 15, August 31, and September 15, 2012.