150.
Match the following
1. Articles of
Provide additional financing, often in the millions, for a
2. Limited liability
Allows for legal treatment as a corporation, but tax
3. Publicly held
Like an S corporation, but there are no limitations on the
Wealthy individuals willing to risk investment funds on a
Has stock traded on a stock exchange such as the New
Corporate earnings are taxed twice – at the corporate level
Describe (a) the nature of the firm’s business activities,
(b) the shares to be issued, and (c) the composition of the
8. Venture capital firms
Stockholders can lose no more than the amount they
151.
Match the following
152.
Match the following
Provide additional financing, often in the millions, for a
2. Additional paid-in
A mixture of attributes somewhere between common
Summarizes the changes in the balance in each
4. Statement of
A large stock dividend recorded as a reduction in the
Represents all net income, less all dividends, since the
9. Articles of
Additional shares of the companies’ own stock given to
Describes the nature of the firm’s business activities,
the shares to be issued, and the composition of the initial
153.
Match the following
154.
Match the following
Summarizes the
changes
in the balance in each
2. Statement of
3. Stockholders’ equity
section of the balance
Shows the balance in each equity account
at a point
Measures the ability of company management to
generate earnings from the resources that owners
Priced high in relation to current earnings as
Essay Questions
155.
The Shoe Exchange issues 5,000 shares of its $1 par value common stock to provide funds
for further expansion. If the issue price is $15 per share, what is the entry to record the
issuance of the stock?
156.
Environmental Designs issues 10,000 shares of its $1 par value common stock at $25 per
share. (1) Record the issuance of the stock. (2) Record the issuance of the stock assuming
it is no-par value stock.
10–87
157.
Diane’s Designs has two classes of stock authorized: 8%, $10 par preferred and $1 par
value common. The following transactions affect stockholders’ equity during 2018, its first
year of operations:
January 1
Issue 200,000 shares of common stock for $15 per share.
February 6
Issue 1,000 shares of preferred stock for $11 per share.
October 10
Repurchase 10,000 shares of its own common stock for $18 per
share.
November 12
Reissue 5,000 shares of treasury stock at $20 per share.
Record each of these transactions.
January 1, 2018
Common Stock (200,000 × $1)
Additional Paid-in Capital (difference)
February 6, 2018
Preferred Stock (1,000 × $10)
Additional Paid-in Capital (difference)
October 10, 2018
Treasury Stock (10,000 shares × $18)
Cash
November 12, 2018
Treasury Stock (5,000 shares × $18)
Additional Paid-in Capital (difference)
158.
Northwest Clothing Supply has the following transactions during the year related to
stockholders’ equity:
January 1
Issues 3,000 shares of no-par value common stock for $20
per share.
March 15
Issues 800 shares of $20 par value preferred stock for $22
per share.
December 1
Declares a cash dividend of $1 per share to all stockholders
of record (both common and preferred) on December 15.
December
15
Date of record.
December
31
Pays the cash dividend declared on December 1.
Record each of these transactions.
Common Stock (3,000 × $20)
March 15
Preferred Stock (800 × $20)
Additional Paid-in Capital (difference)
December 1
159.
Oregon Outfitters issues 1,000 shares of $1 par value common stock at $20 per share.
Later in the year, the company decides to repurchase 200 shares at a cost of $22 per
share. (1) Record the original issue of the 1,000 shares, (2) Record the repurchase of 200
shares, and (3) record the entry if Oregon Outfitters reissues the 200 shares of treasury
stock at $25 per share.
10–91
160.
Court Casuals has 100,000 shares of common stock outstanding as of the beginning of the
year and has the following transactions affecting stockholders’ equity during the year.
May 18
Issues 25,000 additional shares of $1 par value common stock for $40
per share.
May 31
Repurchases 5,000 shares of treasury stock for $45 per share.
July 1
Declares a cash dividend of $1 per share to all stockholders of record
on July 15. Hint: Dividends are not paid on treasury stock.
July 31
Pays the cash dividend declared on July 1.
August 10
Reissues 2,500 shares of treasury stock purchased on May 31 for $46
per share.
Record each of these transactions.
May 18
Common Stock (25,000 × $1)
Additional Paid-in Capital (difference)
May 31
Cash
July 1
July 31
Cash
161.
Tropical Rainwear issues 1,000 shares of its $20 par value preferred stock for cash at $22
per share. Record the issuance of the preferred shares.
10–93
162.
Desert Apparel has 5,000 shares of common stock outstanding. On April 1, the company
declares a $2 per share dividend to stockholders of record on April 15. The dividend is paid
on April 30. Record all necessary entries on the appropriate dates for cash dividends.
163.
On May 15, Canadian Falcon declares a quarterly cash dividend of $0.15 per share payable
on June 10 to all stockholders of record on May 31. Record Canadian Falcon’s declaration
and payment of cash dividends for its 200,000 shares of common stock.
164.
On March 31, the board of directors of Shoeboxes, Inc. declares a 100% stock dividend on
its 100,000, $0.01 par value, common shares. The market price of Shoeboxes common
stock is $30 on March 31. Record the stock dividend.
10–95
165.
Indicate whether each of the following transactions increases (+), decreases (-), or has no
effect (NE) on total assets, total liabilities, and total stockholders’ equity.
Transaction
Total Assets
Total Liabilities
Total Stockholders’ Equity
Issue common stock
Issue preferred stock
Purchase treasury stock
Sale of treasury stock
10–96
166.
Indicate whether each of the following transactions increases (+), decreases (-), or has no
effect (NE) on total assets, total liabilities, and total stockholders’ equity.
Transaction
Total Assets
Total Liabilities
Total Stockholders’ Equity
Issue common stock
Issue preferred stock
Repurchase treasury stock
Sale of treasury stock
Declare cash dividend
Pay cash dividend
100% stock dividend
2-for-1 stock split
Transaction
Total Assets
Total Liabilities
Total Stockholders’ Equity
Issue common stock
Issue preferred stock
Repurchase treasury stock
Sale of treasury stock
Declare cash dividend
Pay cash dividend
100% stock dividend
2-for-1 stock split
10–97
167.
Prom Night Formal Wear has the following stockholders’ equity accounts at December 31,
2018: Common Stock, $1 par value, 2,000,000 shares; Additional Paid-in Capital, $22
million; Retained Earnings, $15 million; and Treasury Stock, 50,000 shares, $1.25 million.
Prepare the stockholders’ equity section of the balance sheet.
10–98
168.
Donnie Hilfiger has the following balances in its stockholders’ equity accounts on
December 31, 2018: Treasury Stock, $375,000; Common Stock, $350,000; Preferred Stock,
$1,200,000; Retained Earnings, $1,675,000; and Additional Paid-in Capital, $3,150,000.
Prepare the stockholders’ equity section of the balance sheet for Donnie Hilfiger as of
December 31, 2018.
10–99
169.
Court Casuals has the following beginning balances in its stockholders’ equity accounts on
January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $4,100,000; and
Retained Earnings, $3,000,000. Net income for the year ended December 31, 2018, is
$800,000. Court Casuals has the following transactions affecting stockholders’ equity in
2018:
May 18
Issues 25,000 additional shares of $1 par value common stock for
$40 per share.
May 31
Repurchases 5,000 shares of treasury stock for $45 per share.
July 1
Declares a cash dividend of $1 per share to all stockholders of
record on July 15. Hint: Dividends are not paid on treasury stock.
July 31
Pays the cash dividend declared on July 1.
August 10
Reissues 2,500 shares of treasury stock purchased on May 31 for
$48 per share.
Taking into consideration all the entries described above, prepare the statement of
stockholders’ equity for the year ended December 31, 2018, using the format provided.
Court Casuals
Statement of Stockholders’ Equity
For the year ended December 31, 2018
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
Stockholders’
Equity
Balance,
January 1
$100,000
4,100,000
3,000,000
-0-
$7,200,000
Issued
common
stock
Repurchased
treasury
stock
Cash
dividends
Sold
treasury
stock
Net income
10-100
Balance,
December
31
Balance,
December
31