20 Minutes, Easy
a.
Stockholders’ equity
authorized 100,000 shares, issued and outstanding 1,000,000$
10,000 shares
Common stock, $1 par value, authorized 500,000 shares
SOLUTIONS TO PROBLEMS SET
A
8% cumulative preferred stock, $100 par value,
PROBLEM 11.1
A
ROBBINSVILLE PRESS
December 31, 2015
Partial Balance Shee
ROBBINSVILLE PRESS
20 Minutes, Easy
a.
Stockholders’ equit
y
authorized, issued, and outstanding 20,000 shares 2,000,000$
issued and outstanding 300,000 shares 300,000
Common stock, $1 par value, authorized 1 million shares,
PROBLEM 11.2
A
MCMINN PUBLICATIONS
December 31, 2015
Partial Balance Sheet
MCMINN PUBLICATIONS
b. Note to financial statements:
As of December 31, 2015, dividends on the 10%, $100 par value, cumulative preferred stock were
10% cumulative preferred stock, $100 par value,
Education.
25 Minutes, Medium
a.
Stockholders’ equity
shares authorized, issued, and outstanding 500,000$
$9 cumulative preferred stock, no-par value, 10,000 shares
authorized, 5,000 shares issued and outstanding 512,000
2014
b.
1.
8% cumulative preferred stock, $100 par, 5,000
PROBLEM 11.3
A
MANHATTAN TRANSPORT COMPAN
Y
December 31, 2015
Partial Balance Shee
MANHATTAN TRANSPORT COMPAN
Y
A corporation might decide to use cumulative preferred stock rather than debt to finance
operations for any of the following reasons (only 2 required):
Although cumulative dividends must eventually be paid if the corporation is profitable,
they do not have to be paid each year and do not become a legal obligation of the
Education.
35 Minutes, Medium
Jan 6 Cash 280,000
Common Stock 40,000
240,000
7 7,000
Common Stock 1,000 6,000
June 4 Land 225,000
Common Stock 30,000
195,000
Nov 15 25,000 25,000
31 25,000
25,000
corporation. Implied issuance price ($7,000 ÷ 500
shares) = $14 per share.
exchange for services relating to formation of the
for land valued at $225,000 (15,000 shares x $15).
Dividends (Preferred Stock)
at $14 per share.
Issued 15,000 shares of common stock in exchange
Additional Paid-in Capital: Common Stock
Additional Paid-in Capital: Common Stock
Organization Costs Expense
PROBLEM 11.4
A
a. General Journal
SHARNES COMMUNICATIONS, INC.
20__
Issued 20,000 shares of $2 par value common stock
Additional Paid-in Capital: Common Stock
Dividends (preferred stock)
To close the Dividends account.
Retained Earnings
b
.
Stockholders’ equity
50,000 shares, issued and outstanding 2,500 shares 250,000$
10% cumulative preferred stock, $100 par, authorized
PROBLEM 11.4
A
SHARNES COMMUNICATIONS, INC.
December 31, 20xx__
_
Partial Balance Shee
SHARNES COMMUNICATIONS, INC. (concluded
)
Common stock, $2 par, authorized 400,000 shares,
35 Minutes, Strong
a. Par value of all preferred stock outstanding 2,400,000$
100$
24,000
b. Dividend requirement per share of preferred stock (7 1/2% x $100
)
7.50$
Par value per share of preferred stock
Number of shares of preferred stock outstanding ($2,400,000 ÷ $100)
PROBLEM 11.5
A
FT. SMITH PRODUCTS
35 Minutes, Medium
In Thousands
(Except for Per
Sh
are
A
mounts
)
a. Par value of all common stock outstandin
g
6,819$
Par value
p
er share 0.50
Number of shares outstandin
g
(
$6
,
819/$0.50
)
13
,
638
b. Dividend re
q
uirement
p
er share of
p
referred stoc
k
17.20$
Numbers of shares of
p
referred stock outstandin
g
345
PROBLEM 11.6
A
PARSONS, INC. CORPORATION
$
8
260
180
$
86
2
11
10
$
e.
f.
g.
PROBLEM 11.6
A
PARSONS, INC. (concluded)
The basic advantage of being publicly owned is that the corporation has the opportunity to
raise large amounts of equity capital from many investors. Some publicly owned
prices.
The primary disadvantages of being publicly owned are the increased governmental
regulations and financial reporting requirements.
The term convertible means that at the option of the preferred stockholder, each preferred
share can be converted into a specified number of common shares. To evaluate the value of
At $248 per share, Parson’s preferred has a dividend yield of 6.9% ($17.20 ÷ $248). In
comparison, an 8%, $50 par preferred selling at $57 has a dividend yield of 7% [(8% x $50
Education.
15 Minutes, Easy
a.
PROBLEM 11.7
A
TECHNO CORPORATION
Par value is the legal capital per share—the amount by which stockholders’ equity cannot
be reduced except by losses. Thus, par value may be viewed as a minimum cushion of
equity capital existing for the protection of creditors.
Book value per share is equal to the net assets represented by each share of common stock.
Book value is a historical cost concept, representing the amounts invested by the
15 Minutes, Medium
Stockholders’ e
q
uit
y
:
Common stock, $1 par, 50,000 shares authorized, issued, and 50,000$
outstanding
Additional
p
aid-in ca
p
ital: Common stoc
k
350,000
00
Retained earnin
g
s, Dec. 31, 2015
198
,
200
c. The treasury stock purchase of $35,000 in 2014 was reported as a financing cash outflow
(negative) in the statement of cash flows for that year. The reissue of the treasury stock for
$40,000 in the following year was reported as a financing cash inflow (positive) in the 2015
statement of cash flows.
shares outstanding).
PROBLEM 11.8
A
a. Feller Corporation
31-Dec-15
Partical Balance Shee
t
FELLER CORPORATION
Education.
g
198
200
30 Minutes, Strong
Stockholders’ e
q
uit
y
:
10%
p
referred stock
,
$100
p
ar
,
cumulative
,
authorized
,
issued
,
and outstandin
g
30
,
000 shares 3,000,000$
Common stock
,
$10
p
ar
,
200
,
000 shares authorized
,
PROBLEM 11.9
A
a.
HERNDON INDUSTRIES
y