Chapter 11 – Reporting and Interpreting Owners’ Equity
Solutions Chapter 11 – Set B Exercises – Libby 8e
E11–1B.
Computation of End of Year Balance for Treasury Stock:
Beginning balance 380,474
E11–2B.
Req. 1 The number of authorized shares is specified in the corporate charter: 250,000.
E11–3B.
Req. 1
Stockholders’ Equity
Contributed capital:
Preferred stock, authorized 6,000 shares,
issued and outstanding, 5,000 shares (1) …………………………………………
$ 40,000
Common stock, authorized 105,000 shares,
issued and outstanding, 22,000 shares (2) ……………………………………….
264,000
Capital in excess of par, preferred (3) …………………………………………………
60,000
Capital in excess of stated value, no-par common (4) …………………………..
88,000
Total contributed capital ………………………………………………………………..
452,000
4
E11–7B.
Stockholders’ Equity
Contributed capital:
Preferred stock, 8%, par $45, authorized 65,000 shares,
issued and outstanding, 25,000 shares ………………………………………..
$1,125,000
Capital in excess of par, preferred stock (1) ……………………………………..
500,000
Capital in excess of par, common stock (2) ……………………………………..
948,000
Common stock, par $8 authorized 99,000 shares,
issued, 79,000 shares ……………………………………………………………….
632,000
Treasury stock (3) ………………………………………………………………………
(120,000)
Retained earnings (4) ……………………………………………………….…………………
60,000
Total stockholders’ equity ………………………………………………………………
$3,145,000
(1) ($65 cash – $45 par) x 25,000 shares = $500,000.
(2) ($20 cash – $8 par) x 79,000 shares = $948,000.
(3) 6,000 shares x $20 per share = $120,000.
(4) $80,000 – $20,000 = $60,000.
E11–8B.
Req. 1
a.
Cash (16,000 shares x $20) (+A) ……………………………………
320,000
Common stock, no-par (+SE) ……………………………………..
320,000
b.
Cash (6,000 shares x $37) (+A) ……………………………………..
222,000
Common stock, no-par (+SE) …………………………………….
222,000
c.
Cash (7,000 shares x $35) (+A) ……………………………………..
245,000
Preferred stock (7,000 shares x $10) (+SE) ………………….
70,000
Capital in excess of par, preferred (+SE) ……………………..
175,000
E11–9B.
Chapter 11 – Reporting and Interpreting Owners’ Equity
Req. 1
a.
Treasury stock (300 shares x $30) (+XSE, -SE) ……………….
9,000
Cash (-A) …………………………………………………………………
9,000
Bought treasury stock.
b.
Cash (45 shares x $35) (+A) ………………………………………….
1,575
Treasury stock (45 shares x $30) (-XSE, +SE) ……………..
1,350
Capital in excess of par (+SE) …………………………………….
225
Sold treasury stock.
c.
Cash (40 shares x $18) (+A) ………………………………………….
720
Capital in excess of par (-SE) ………………………………………..
480
Treasury stock (40 shares x $30) (-XSE, +SE) …………….
1,200
Sold treasury stock.
E11–10B.
Req. 1
Preferred
(15,000
Shares)
Common
(40,000
Shares)
Total
a)
Noncumulative:
Preferred ($150,000 x 10%) ……………………………..
$ 15,000
$ 15,000
Balance to common ($265,000 – $15,000) …………
$250,000
250,000
$ 15,000
$250,000
$265,000
Per share ……………………………………………………….
$1.00
$6.25
b)
Cumulative:
Preferred, arrears ($150,000 x 10% x 3 years) ……
$ 45,000
$ 45,000
Preferred, current year ($150,000 x 10%) …………..
15,000
15,000
Balance to common ($265,000 – $45,000 – $15,000)
$205,000
205,000
$60,000
$205,000
$265,000
Per share ……………………………………………………….
$4.00
$5.125
Req. 2
The total dividend amount and dividends per share of common stock were less under
the second assumption because the preferred stock preferences increased while at the
same time the total dividend amount remained stable.
