112.
On December 31, 2016, Brave Corporation reported the following on its balance sheet:
Cash
$22,000
Treasury stock ($8 per share, at cost)
(16,000)
Retained earnings
130,000
Common stock, par $5; (authorized
100,000 shares)
400,000
Additional paid-in capital
?
Total contributed capital
540,000
Required:
Prepare the stockholders’ equity section of the balance sheet.
Common stock, par $5 authorized 100,000 shares, issued 80,000
Total contributed capital
Retained earnings
Total contributed capital and retained earnings
Less: Treasury stock 2,000 shares
(16,000)
Total stockholders’ equity
113.
Constance Corporation reported a $750,000 balance in its common stock account at the end
of 2016. The company held 50,000 shares of treasury stock and had 700,000 shares of
common stock outstanding.
Required:
Calculate the par value per share of the company’s common stock.
114.
Three dates that are significant for cash dividends are described in each part below.
Part A: Name each of the described dates.
Description
1.
Date on which the board of directors approves
the dividend.
2.
Date on which a list of stockholder names is
prepared.
3.
Date on which the dividend checks are written.
Part B: Prepare the journal entry for each date. Assume a $25,000 cash dividend.
1.
2.
Date on which a list of
stockholder names is prepared.
3.
Date on which the dividend
checks are written.
Date of
1.
Date on which the board of directors
approves the dividend.
2.
Date on which a list of stockholder
names is prepared.
3.
Date on which the dividend checks
are written.
115.
At the end of 2016, Washington Corporation reported a $40,000 balance in its common stock
account (par value $1 per share). The treasury stock account balance was $720 (cost $6 per
share). During 2016, the company declared and paid a cash dividend of $1.50 per share.
Required:
Calculate the total amount of the 2016 cash dividend.
116.
Survivor Company was formed on January 1, 2016 by selling and issuing 20,000 shares of
common stock at $15 per share. On December 1, 2016, the company declared a cash dividend
of $10,000, which will be paid in cash on January 15, 2017.
Required:
A. Prepare the journal entry to record the sale and issuance of the common stock on January
1, 2016 under each of the following independent assumptions:
1. The common stock has a par value of $10 per share.
2. The common stock was no-par with a stated value of $5 per share.
3. The common stock was no-par and had no stated value.
B. Prepare the journal entry to record the dividend declaration on December 1, 2016.
C. Prepare the journal entry to record payment of the dividend on January 15, 2017.
117.
The following information is available for Bradford Bikes for the years 2017 and 2016:
2017
2016
Market price of common stock
$53.00
$41.50
Earnings per share
$2.45
$2.07
Dividends per share
$0.85
$0.63
Required:
A. Calculate the dividend yield ratio for both 2017 and 2016.
B. Interpret the yield ratio in terms of whether it is high or low, or whether it indicates a
steady dividend policy, and whether Bradford Bikes appears to be growing or to be stagnant.
118.
The following information is available for Italiano Ices for the years 2017 and 2016:
2017
2016
Market price of common
stock
$38.30
$44.00
Earnings per share
$2.00
$1.77
Dividends per share
$1.00
$0.88
Required:
A. Calculate the dividend yield for both 2017 and 2016.
B. What caused the change in the dividend yield ratio from 2016 to 2017?
C. Comment on the payout of dividends relative to the net income earned over the two years.
What does your choice indicate about the company’s strategy with regard to paying dividends?
119.
The board of directors of Atlantic Corp. does is deciding whether to declare and pay a cash
dividend or to declare and distribute a stock dividend.
Required:
Complete the following chart to show the overall effect on each financial statement item for a
cash dividend and a stock dividend. Enter the letter “I” if the effect of the dividend is to
increase the financial statement item, a letter “D” if the effect of the dividend is to decrease
the financial statement item, or a letter “N” if there is no overall effect. (Hint: Think of the
journal entries that would be prepared for a cash dividend and a stock dividend. The overall
effect is the net effect from declaration to final payment or distribution.)
Item on Financial
Statement
Cash
Dividend
Stock
Dividend
Assets
Liabilities
Capital stock issued
Retained earnings
Total stockholders’
equity
Total stockholders’
equity
120.
Tractor Corporation was just formed. The following accounts with code letters are given
below.
Required:
Indicate the appropriate journal entry for each transaction by entering the code letters and
the correct amounts (do not use dollar signs). The transactions, including the example, are
not interrelated unless otherwise stated.
A.
Cash
F.
Accounts payable
B.
Remaining assets
G.
Bonds payable
C.
Retained earnings
H.
Additional paid-in capital
D.
Common stock, par $20
I.
Treasury stock
E.
Dividends payable
J.
No entry to record
(Enter 0 for zero, in the amount column)
Transaction
Debits
Credits
Code
Amount
Code
Amount
Ex.
Paid an account payable of $200.
F
200
A
200
1.
Issued 5,000 shares of common stock
at $26 per share.
2.
Issued a 10% stock dividend when the
stock was selling at $30 per share.
3.
Declared a cash dividend of $1 per
share on the shares outstanding.
4.
Paid the cash dividend of $1 per share
declared earlier (in 3 above).
5.
Purchased 100 shares of treasury
stock at $27 per share.
6.
Issued a 2-for-1 stock split when the
market price was $30 per share.
Transaction
Debits
Credits
121.
HighRise Company reported the following amounts of contributed capital in the stockholders’
equity accounts as of January 1, 2016:
Contributed capital:
Common stock, par $5, authorized
50,000 shares;
Issued and outstanding 30,000
shares
$150,000
Additional paid-in capital
100,000
Required:
Indicate the journal entry to record each of the following transactions by entering the letter
code corresponding to each account that would be debited and credited. Enter the code letter
and the amount of each debit and credit (do not use dollar signs). The transactions, including
the example, are not interrelated.
Ex.
Dec. 1, 2016—The board of directors declared a $2 per share cash
stock dividend. At the date of declaration, the market price per share
was $11.
Dec. 2, 2016—The corporation sold and issued 20,000 shares of its
Dec. 28, 2016—The corporation purchased 200 of its own shares at
$10 per share.
