20 Minutes, Easy
a.
Stockholders’ equity
authorized 2,000 shares, issued and out- 50,000$
standing 500 shares
1
120
000
1
802
000
T
3
0
000
$
128
148
1
,
802
,
000
$
b.
10% cumulative preferred stock, $100 par value,
SOLUTIONS TO PROBLEMS SET B
PROBLEM 11.1B
SEARFOSS, INC.
December 31, 2015
Partial Balance Shee
t
SEARFOSS, INC.
Retained earnings, December 31, 2015
There are no dividends in arrears at December 31, 2015. We know this because common
dividends were paid in each of the four years that the company was in existence. Common
Education.
20 Minutes, Easy
a.
Stockholders’ equity
authorized, issued, and outstanding 10,000 shares 1,000,000$
T
0
000
$
4,100,000$
$
500
,
000
1
,
600
,
000
2
,
100
,
000
2,000,000$
Less:
N
et
l
oss o
f
201
5
1
,
2
5
0
,
000
75
0
,
000
$
c. No. Dividends do not represent a liability of the corporation until they are declared by the
board of directors.
b. Note to financial statements:
Retained earnings, December 31, 2015
Common dividends ($.80 x 400,000 shares x 5 years)
Retained earnings, December 2014
Net income for the five-year period 2010-2014
Less: Preferred dividends ($100,000 x 5 years)
Common stock, $1 par value, authorized 1 million shares,
PROBLEM 11.2B
BANNER PUBLICATION
S
December 31, 2015
Partial Balance Shee
t
BANNER PUBLICATION
S
10% cumulative preferred stock, $100 par value,
Education.
600
000
$
25 Minutes, Medium
a.
Stockholders’ equity
shares authorized, issued, and outstanding 1,000,000$
$6 cumulative preferred stock, no-par value, 8,000 shares
authorized, 5,000 shares issued and outstanding 320,000
shares issued and outstanding 130,000
1
193
000
Retained earnings at Dec. 31, 2013 530,000$
Add
:
N
et
i
ncome
f
or
2014
an
d
201
5
1
,
400
,
000
Net income for four-year period 1,930,000$
Less: Dividends paid on 10% preferred stock:
2013 ($100,000 in arrears) –$
201
(300
201
30
(60
201
)
260
(3
1
193
000
$
Common stock, $1 par, 260,000 shares authorized, 130,000
*Computation of retained earnings at December 31, 2015:
PROBLEM 11.3B
RAY BEAM, INC.
December 31, 2015
Partial Balance Shee
t
RAY BEAM, INC.
10% cumulative preferred stock, $100 par value, 10,000
35 Minutes, Medium
Jan 7 Cash 300,000
Common Stock 30,000
270,000
12 12,000
Common Stock 1,000
11,000
20__
Issued 1,000 shares of common stock to Deal in
Issued 30,000 shares of $1 par value common stock
Additional Paid-in Capital: Common Stock
Organization Costs Expense
at $10 per share.
PROBLEM 11.4B
a. General Journal
MARKUP, INC.
Additional Paid-in Capital: Common Stock
Education.
20 Minutes, Easy
b
.
Stockholders’ equity
100,000 shares, issued and outstanding 4,000 shares 400,000$
391
Total paid-in capital 832,000$ 7
90
,
000
T
ota
l
stoc
kh
o
ld
ers
‘
equ
i
ty
1
,
622
,
000
$
(20
$
*Computation of retained earnings at December 31, 20xx:
5% cumulative preferred stock, $100 par, authorized
PROBLEM 11.4B
MARKUP, INC.
December 31, 20x
x
Partial Balance Shee
t
MARKUP, INC. (concluded)
Retained earnings*
35 Minutes, Strong
a. Par value of all preferred stock outstanding 4,400,000$
100$
44,000
b. Dividend requirement per share of preferred stock (10% x $100
)
10$
Par value per share of preferred stock
Number of shares of preferred stock outstanding ($4,400,000 ÷ $100)
PROBLEM 11.5B
MIRROR, INC.
Education.
35 Minutes, Medium
In Thousands
(Except for Pe
r
Sh
are
A
moun
t
s
)
a. Par value of all common stock outstandin
g
9,600$
Par value
p
er shar
e
3$
Number of shares outstandin
g
(
$9
,
600/$3
)
3
,
200
b. Dividend re
q
uirement
p
er share of
p
referred stoc
k
10$
PROBLEM 11.6B
TIMBERLAKE CORPORATION
2
$
76
136
$
p
50
42
$
e.
f.
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
regulations and financial reporting requirements.
PROBLEM 11.6B
TIMBERLAKE CORPORATION (concluded
)
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
15 Minutes, Easy
a.
PROBLEM 11.7B
WHITAKER VIDEO
The very low par value offers little “cushion” to the company’s creditors. On the other
hand, a market value of many times book value implies that little cushion is required for
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.
capital historically invested.
Education.
15 Minutes, Medium
Stockholders’ e
q
uit
y
:
Common stock, $3
p
ar, 50,000 shares authorized, issued, a
n
150,000$
outstandin
g
Additional
p
aid-in ca
p
ital: Common stock 350,000
Additional
p
aid-in ca
p
ital: Treasur
y
stoc
k
10
,
000
9
000
346
$
PROBLEM 11.8B
a. TEEK CORPORATION
31-Dec-15
Partial Balance Shee
t
TEEK CORPORATION
346