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Chapter 13 - Accounting for Corporations
Exercise 13-16 (20 minutes)
1.
Total stockholders’ equity.............................................. $1,585,000
Less equity applicable to preferred shares
Call price ($30 x 10,000)............................................... $300,000
Cumulative dividends in arrears (none)..................... 0 (300,000)
2.
Total stockholders’ equity.............................................. $1,585,000
Less equity applicable to preferred shares
Call price ($30 x 10,000)............................................... $300,000
Cumulative dividends in arrears (3 x 6% x $250,000)... 45,000 (345,000)
Exercise 13-17 (20 minutes)
1. Share capital Common stock
Retained profit Retained earnings
2. Cash........................................................................... 624
3. 2013 Retained profit = 2012 Retained profit + 2013 Income – 2013 Dividends
€ 20,468 € 20,964 € 5,263 € 5,759
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Chapter 13 - Accounting for Corporations
Exercise 13-18 (40 minutes)
Part 1
Jan. 2 Treasury Stock, Common..............................................75,000
Cash........................................................................... 75,000
Purchased treasury stock (3,000 x $25).
July 9 Cash*...............................................................................36,000
Treasury Stock, Common**..................................... 30,000
Paid-In Capital, Treasury Stock***.......................... 6,000
Reissued treasury stock.
*(1,200 x $30) **(1,200 x $25) ***(1,200 x $5)
Oct. 22 Common Dividend Payable...........................................59,400
Cash........................................................................... 59,400
Paid cash dividend.
Dec. 31 Income Summary...........................................................52,000
Retained Earnings.................................................... 52,000
Closed Income Summary account.
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Chapter 13 - Accounting for Corporations
Exercise 13-18 (Concluded)
Part 2
ALEXANDER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2016
Retained earnings, December 31, 2015............................ $340,000
Plus net income.................................................................. 52 ,000
Part 3
ALEXANDER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2016
Common stock$25 par value, 50,000 shares
authorized, 30,000 shares issued and outstanding;
300 shares in treasury..................................................... $ 750,000
Paid-in capital in excess of par value, common stock.... 50,000
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Chapter 13 - Accounting for Corporations
PROBLEM SET A
Problem 13-1A (30 minutes)
Part 1
a. To record sale of 10,000 ($250,000/$25 per share) shares of $25 par
value common stock for $30 ($300,000/10,000 shares) per share.
d. To record sale of 3,000 ($75,000/$25 per share) shares of $25 par
value common stock for $40 ($120,000/3,000 shares) per share.
Part 2
Number of outstanding shares
Issued in (a)........................................ 10,000
Issued in (b)........................................ 5,000
Total..................................................... 20,000
Part 3
Minimum legal capital = Outstanding shares x Par value per share
= 20,000 x $25 = $500,000
Part 4
Total paid-in capital from common stockholders
From transaction (a)......................... $300,000
Part 5
Book value per common share
Total stockholders’ equity (given).... $695,000
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Chapter 13 - Accounting for Corporations
Problem 13-2A (60 minutes)
Part 1
Jan. 1 Treasury Stock, Common..............................................80,000
Cash........................................................................... 80,000
Purchased treasury stock (4,000 x $20).
July 6 Cash*...............................................................................36,000
Treasury Stock, Common**..................................... 30,000
Paid-In Capital, Treasury Stock***.......................... 6,000
Reissued treasury stock.
*(1,500 x $24) **(1,500 x $20) ***(1,500 x $4)
Oct. 28 Common Dividend Payable...........................................80,000
Cash........................................................................... 80,000
Paid cash dividend.
Dec. 31 Income Summary...........................................................388,000
Retained Earnings.................................................... 388,000
Closed Income Summary account.
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Chapter 13 - Accounting for Corporations
Problem 13-2A (Concluded)
Part 2
KOHLER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2016
Retained earnings, December 31, 2015............................ $270,000
Plus net income.................................................................. 388 ,000
658,000
Part 3
KOHLER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2016
Common stock$10 par value, 100,000 shares
authorized, 40,000 shares issued and outstanding...... $400,000
Paid-in capital in excess of par value, common stock... 60,000
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Chapter 13 - Accounting for Corporations
Problem 13-3A (45 minutes)
Part 1
Explanations for each of the journal entries
Oct. 2 Declared a cash dividend of $2 per share of common stock.
($60,000 / 30,000 shares)
Nov. 5 Distributed the common stock dividend.
Dec. 1 Executed a 3-for-1 stock split. ($12 par / $4 par = 3-for-1 ratio)
Dec. 31 Closed the Income Summary account to Retained Earnings.
Part 2
Oct. 2 Oct. 25 Oct. 31 Nov. 5 Dec. 1 Dec. 31
Common stock.............$360,000 $360,000 $360,000 $396,000 $396,000 $396,000
Common stock
0
Total equity....................$710,000
$710,000
$710,000
$710,000
$710,000
$920,000
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Chapter 13 - Accounting for Corporations
Problem 13-4A (45 minutes)
Part 1
Outstanding common shares
Jan. 5 Apr. 5 July 5 Oct. 5
Beginning balance.......................... 40,000 40,000 40,000 40,000
Less treasury stock (Mar. 20)......... (3,000) (3,000) (3,000)
Part 2
Cash dividend amounts
Jan. 5 Apr. 5 July 5 Oct. 5
Outstanding shares...................... 40,000 37,000 37,000 44,400
Part 3
Capitalization of retained earnings for small stock dividend
Number of shares......................................................................... 7,400
Market value per share................................................................ $12
Total capitalized............................................................................ $ 88 ,800
Part 4
Cost per share of treasury stock
Part 5
Net income
Retained earnings, beginning balance...................................... $320,000
Less dividends: Jan. 5............................................................... (20,000)
Apr. 5............................................................... (18,500)
July 5............................................................... (18,500)
Therefore, net income = $248,000
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Chapter 13 - Accounting for Corporations
Problem 13-5A (40 minutes)
1. Market price = $85 per share (current stock exchange price given)
3. Book values with no dividends in arrears
Book value per preferred share = par value (when not callable) = $50
Common stock
Total equity................................................ $280,000
4. Book values with two years’ dividends in arrears
Preferred stock
Preferred stock par value........................... $ 50,000
Plus two years’ dividends in arrears*........ 5,000
Preferred equity........................................... $ 55,000
*2 years’ dividends = 2 x ($50,000 x 5%) = $5,000
Number of outstanding shares.................. 1,000
Book value per preferred share................. $ 55.00 ($55,000 / 1,000 shares)
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