122.
On January 1, 2016, the stockholders’ equity section of Gibbons Corporation’s balance sheet
reported the following:
Common stock, par $10, authorized
100,000 shares,
issued 10,000 shares
$100,000
Additional paid-in capital
50,000
Retained earnings
160,000
During 2016, the following selected transactions occurred (assume they occurred in the order
given):
April 1
Issued a 10% stock dividend when the
market price was $12.
May 1
200 shares of treasury stock were
purchased at $11 per share.
Sept.
1
Declared and paid a cash dividend of
$19,800.
Dec.
31
Net income was $30,000.
Required:
Prepare the stockholders’ equity section of the balance sheet as of December 31, 2016.
Common stock, par $10; authorized 100,000 shares; issued 11,000 shares; outstanding 10,800
Retained earnings
Less: Treasury stock, 200 shares (at cost)
Total stockholders’ equity
123.
On January 1, 2016, the accounts of Mac Corporation showed the following:
Common stock, par $1, authorized 100,000
shares
?
Additional paid-in capital (at $2 per share)
60,000
Retained earnings
140,000
During 2016, the following transactions occurred which affected stockholders’ equity (in the
order given):
A.
Issued a 100% stock dividend when the market
price was at $5 per share.
B.
Purchased treasury stock, 1,000 shares, at a
total cost of $8,000.
C.
Declared and paid cash dividends, $15,000.
D.
Net income for 2016, $25,000.
Required:
The stockholders’ equity section of the balance sheet for the company must be prepared for
the December 31, 2016 balance sheet. The format is provided below with certain amounts
missing. Supply the missing amounts by entering them in the blanks.
Mac Corporation
Stockholders’ Equity (Partial Balance Sheet)
December 31, 2016
Common stock, par $1, 100,000 authorized shares,
(1a)
(1b)
________ shares issued
________ shares outstanding
(2)
$__________
Additional paid-in capital
(3)
$__________
Retained earnings
(4)
$__________
(5)
Treasury stock, __________ shares, at cost
(6)
$__________
Total stockholders’ equity
(7)
$__________
124.
During 2017, Sanders Corporation prepared the following journal entry to record the
declaration and payment of a cash dividend:
Retained earnings (for common
stock dividend)
10,000
Retained earnings (for preferred
stock dividend)
3,600
Cash
13,600
The total par values of common and preferred stock outstanding were $55,000 and $40,000,
respectively. No dividends were declared or paid during 2016.
There are 7,500 shares of common stock held in treasury.
The common stock has a par value of $2 per share.
Required:
A. If the preferred stock is noncumulative, calculate the current dividend rate on the preferred
stock.
B. Calculate the number of common stock shares that received dividends.
C. Calculate the dividend paid per share of common stock.
125.
Wedge Corporation has the following capital stock outstanding:
$1 par value common stock, 250,000 shares.
8% preferred stock, par $100, 5,000 shares, cumulative, with 2 years in arrears.
Cash dividends of $150,000 were declared and paid near the end of the current year.
Required:
A. Calculate the dividends paid to the preferred stockholders.
B. Calculate the dividends paid to the common stockholders.
126.
Marlin, Inc., declared a cash dividend of $40,000 in 2015 when the following stocks were
outstanding:
Common stock 20,000 shares, par $15
$300,000
Preferred stock, 6%, 2,500 shares, par
$10
25,000
No dividends were declared or paid during the prior year.
Required:
Compute the amount of cash that would be paid to each stockholder group under each of the
following separate cases. Show the amount of current dividend and dividends paid in arrears
wherever applicable.
Case A
The preferred stock is
noncumulative.
Preferred:
$_______
Common
$______
Case B
The preferred stock is cumulative.
Preferred:
$_______
Common
$______
127.
DRP, Inc. issued 50,000 shares of its own $50 par value preferred stock for cash of $110 per
share, and issued 200,000 shares of its no-par common stock for cash of $40 per share.
Required:
Prepare the required journal entries for the issuance of each class of stock.
128.
For the listed items below, identify the effects on cash flow from financing activities as
increasing (I), decreasing (D), or (N) having no effect on financing cash flows:
Effect on
Financing
Cash Flows
Issued previously unissued
shares of common stock
Cash dividend
Repurchase of common shares
for treasury
Stock split
Reissuance of treasury shares
Stock dividend
Issued previously unissued shares
Cash dividend
Repurchase of common shares for
Stock split
Reissuance of treasury shares
Stock dividend
129.
Determine the effect of the following transactions on the financial statement components
identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component.
B: If the transaction results in a decrease in the financial statement component.
C. If the transaction does not affect the financial statement component.
Transaction 1: Common stock was sold at a price in excess of par value.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 2: Treasury stock was purchased using cash.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 3: Treasury stock was resold for cash at a price less than the treasury stock’s
cost.
Net income _____
Total assets _____
Stockholders’ equity _____
Transaction 4: Treasury stock was resold for cash at a price greater than the treasury stock’s
cost.
Net income _____
Total assets _____
Stockholders’ equity _____
130.
Determine the effect of the following transactions on the financial statement components
identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component.
B: If the transaction results in a decrease in the financial statement component.
C. If the transaction does not affect the financial statement component.
Transaction 1: A cash dividend was declared.
Net income _____
Total assets _____
Total liabilities ______
Stockholders’ equity _____
Transaction 2: A previously declared cash dividend was paid.
Net income _____
Total assets _____
Total liabilities ______
Stockholders’ equity _____
Transaction 3: A 2-for-1 stock split was declared and distributed.
Net income _____
Total assets _____
Total liabilities _____
Stockholders’ equity _____
Transaction 4: A common stock dividend was declared and distributed.
Net income _____
Total assets _____
Total liabilities _____
Stockholders’ equity _____
131.
Prepare journal entries, with account titles only and without dollar amounts, for each of the
following DJ Partnership transactions:
1. D and J each contribute cash into the partnership in exchange for capital.
2. D makes a cash withdrawal from the partnership.
3. Partnership net income is allocated to the partners’ capital accounts.
4. D’s drawing account is closed.