552 ♦ Chapter 11
10. C&C Co. has 100,000 shares of $6 par common stock outstanding. The board of directors declared
a 10% stock dividend when the market priced of the stock was $10 per share. Record the journal
entries on the date of declaration and the date of distribution.
Date of declaration:
Date of distribution:
11. At the close of business on March 31, 2006, ClipJoint, Inc. had a closing stock price of $92.50
earnings per share of $15.25, and dividends per share of $3.35. Determine ClipJoint’s dividend
yield (round to two decimal places) and payout ratio (round to two decimal places).
Retained Earnings
Common Stock Dividend Distributable
Paid in Capital in Excess of Par Common
Common Stock Dividend Distributable
Common Stock
Stockholders’ Equity: Capital Stock and Dividends ♦ 553
12. Big Foot, Inc. manufactures sport sandals. The stockholders’ equity accounts at the beginning of
2006 are as follows:
Common stock $10 par (1,000,000 shares authorized, 100,000 shares issued and
outstanding)
$1,000,000
Paid-in capital in excess of par
2,000,000
Retained earnings
5,000,000
The following transactions occurred during the year. Prepare the journal entries for these
transactions.
January 31
Paid cash dividends of $.50 per share on the common stock. (This is only the
payment. The liability was properly accrued last year).
February 27
Issued 20,000 shares of common stock for $20 per share
March 15
Declared a 10% stock dividend on common stock when the market price per share is
$30.
April 10
Issued the certificates for the dividend declared on March 15th.
September 20
Declared a $1 per share dividend on common stock
General Journal
554 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 555
13. On the general journal provided, record the following transactions that occurred during 2006 for
Bush Corp.
January 15
Issued 10,000 shares of $2 par value common stock for $50,000.
February 1
Issued 3,000 shares of 5%, $100 par value preferred stock for equipment with an
appraised value of $400,000.
July 1
Reacquired 1,000 shares of its own common stock for $6 per share
August 15
The board of Directors declared the appropriate preferred stock dividend. There were
3,000 shares outstanding.
October 31
Sold 500 of the shares reacquired on July 1 for $7 per share.
General Journal
Date
Description
Debit
Credit
556 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 557
CASE
PepsiCo’s Financial Statements
Answer the following question(s) using these selected portions of PepsiCo’s financial statements.
558 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 559
560 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 561
562 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 563
564 ♦ Chapter 11
Stockholders’ Equity: Capital Stock and Dividends ♦ 565
1. Refer to PepsiCo’s Financial Statements. What amount of dividends was paid to common
stockholders? To preferred stockholders?
2. Refer to PepsiCo’s Financial Statements. Did PepsiCo have any treasury stock? What is the dollar
amount at the end of 2001?
566 ♦ Chapter 11
3. Refer to PepsiCo’s Financial Statements. What was the beginning balance in retained earnings for
2001? What types of items caused retained earnings to change?
4. Refer to PepsiCo’s Financial Statements. Does the Statement of Common Shareholders’ Equity
show net income for the year? Is so, what is the amount?