Title: Exercise 13-7
QA_Ori:
1.
Feb.
5
Retained Earnings* 480,000
Common Stock Dividend Distributable** 120,000
Paid-In Capital in Excess of Par Value,
Feb. 28 Common Stock Dividend Distributable 120,000
2.
Before After
Total stockholders’ equity $1,575,000 $1,575,000
3.
February 5 February 28
Market value per share $ 40 $ 33.40
Note: The total market value of the investor’s holdings is approximately the same for
Title: Exercise 13-8
QA_Ori:
Non-Cumulative
Preferred Common
2013 ($20,000 paid)
2015 ($200,000 paid)
2016 ($350,000 paid)
Preferred* $ 30,000
* The holders of the noncumulative preferred stock are entitled to no more than $30,000
of dividends in any one year (7.5% x $5 x 80,000 shares).
Title: Exercise 13-9
QA_Ori:
Cumulative
Preferred Common
2013 ($20,000 paid)
arrears.)
2014 ($28,000 paid)
Preferredarrears from 2013 $ 10,000
2015 ($200,000 paid)
Preferredarrears from 2014 $ 12,000
2016 ($350,000 paid)
* The holders of the cumulative preferred stock are entitled to no more than
Title: Exercise 13-10
QA_Ori:
1. (a)
Oct. 11 Treasury Stock (5,000 x $25) 125,000
(b)
Nov. 1 Cash (1,000 x $31) 31,000
(c)
Nov. 25 Cash (4,000 x $20) 80,000
2. Changes to the equity section include the following
(i) The common stock account description line will change. After the treasury stock
purchase, it should read:
The dollar balance of this account does not change with a treasury stock
purchase.
(iii) The retained earnings dollar balance will not change but its description should
change to read:
(iv) After the purchase, a deduction for the cost of treasury stock is reported
immediately before the total line for stockholders’ equity as:
(v) Total stockholders’ equity will change from $1,800,000 to $1,675,000.
Revised equity section appears as follows
Common stock$10 par value; 72,000 shares authorized
and issued; 5,000 shares in treasury $ 720,000
Title: Exercise 13-11
QA_Ori:
Amos Company
Statement of Retained Earnings
For Year Ended December 31, 2013
Retained earnings, December 31, 2012, as previously reported $1,375,000
Prior period adjustment
Title: Exercise 13-12
QA_Ori:
1. Net income $2,700,000
2. Net income available to common stockholders $2,311,980
Title: Exercise 13-13
QA_Ori:
1. Net income $960,000
2. Net income available to common stockholders $840,000
Title: Exercise 13-14
QA_Ori:
Stock
Market Value
per Share
Divided
by
Earnings per
Share
Price-Earnings
Ratio
1 $176.40 $12.00 = 14.7
Analysis: Stocks with PE ratios less than about 5 to 8 are likely viewed as potentially
Title: Exercise 13-15
QA_Ori:
Dividend yield
1. $16.06 / $220.00 = 7.3%
Analysis: The yield of 1.2% on stock #4 is sufficiently low that it probably would be
classified as a growth stock, and not an income stock. Note that classification involves
expectations (not necessarily realizations).
Title: Exercise 13-16
QA_Ori:
1.
Total stockholders’ equity $1,585,000
Less equity applicable to preferred shares
2. QA_Ori:
Total stockholders’ equity $1,585,000
Less equity applicable to preferred shares
Title: Exercise 13-17
QA_Ori:
1. Share capital Common stock
2. Cash 615
Share Capital (at Par Value) 484
Title: Exercise 13-18
QA_Ori:
Part 1
Jan. 2 Treasury Stock, Common 75,000
Cash 75,000
Purchased treasury stock (3,000 x $25).
Part 2
QA_Ori:
ALEXANDER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2014
Retained earnings, December 31, 2013 $340,000
*From August 27 transaction of reissuance of treasury shares.
Part 3
QA_Ori:
ALEXANDER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2014
Common stock$25 par value, 50,000 shares
authorized, 30,000 shares issued and outstanding; 300
Title: Problem 13-1A
QA_Ori:
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.
b. To record issuance of 5,000 ($125,000/$25 per share) shares of $25 par value
Part 2
Number of outstanding shares
Issued in (a) 10,000
Issued in (b) 5,000
Part 3
Minimum legal capital = Outstanding shares x Par value per share
Part 4
Total paid-in capital from common stockholders
From transaction (a) $300,000
Part 5
Book value per common share
Title: Problem 13-2A
QA_Ori:
Part 1
Jan. 1 Treasury Stock, Common 80,000
Jan. 5 Retained Earnings 72,000
Feb. 28 Common Dividend Payable 72,000
July 6 Cash* 36,000
Treasury Stock, Common** 30,000
Aug. 22 Cash* 42,500
Sept. 5 Retained Earnings 80,000
Oct. 28 Common Dividend Payable 80,000
Dec. 31 Income Summary 388,000
Part 2
KOHLER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2014
Retained earnings, December 31, 2013 $270,000
Plus net income 388,000
Part 3
KOHLER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2014
Common stock$10 par value, 100,000 shares