Ex. 11.15 a.
The par value is $.05 per share. The common stock originally sold significantly
above par value because the paid-in capital in excess of par value is large.
20 Minutes, Easy
a.
Stockholders’ equity
authorized 100,000 shares, issued and outstanding 1,000,000$
10,000 shares
b. 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
shareholders could not have received dividends in each year of the company’s existence had
any dividends been in arrears on the preferred stock.
Common stock, $1 par value, authorized 500,000 shares
SOLUTIONS TO PROBLEMS SET
A
8% cumulative preferred stock, $100 par value,
PROBLEM 11.1
ROBBINSVILLE PRESS
December 31, 2015
Partial Balance Shee
t
ROBBINSVILLE PRESS
a.
Stockholders’ equit
y
000
Total paid-in capital 8,000,000$
23
5,
000
T
ota
l
stoc
kh
o
ld
ers
‘
equ
i
t
y
8
,
23
5,
000
$
1
000
2
000
L
1
82
000
23
000
$
Retained earnings*
MCMINN PUBLICATIONS
December 31, 2015
Partial Balance Sheet
MCMINN PUBLICATIONS
25 Minutes, Medium
a.
Stockholders’ equity
600
,
000
Total paid-in capital 1,812,000$
640
,
000
T
ota
l
stoc
kh
o
ld
ers
‘
equ
i
ty
2
,
4
5
2
,
000
$
Add
2014
890
000
Less: Dividends paid on 8% preferred stock:
2013 ($40,000 in arrears) –$
201
(120
201
100
160
000
(210
640
000
$
8% cumulative preferred stock, $100 par, 5,000
PROBLEM 11.3
MANHATTAN TRANSPORT COMPAN
Y
December 31, 2015
Partial Balance Shee
t
MANHATTAN TRANSPORT COMPAN
Y
Additional paid-in capital: Common stock
Retained earnings*
35 Minutes, Medium
Jan 6 Cash 280,000
PROBLEM 11.4
a. General Journal
SHARNES COMMUNICATIONS, INC.
20__
b
.
Stockholders’ equity
50,000 shares, issued and outstanding 2,500 shares 250,000$
(2
122
,
200
$
Retained earnings at December 31, 20xx.
10% cumulative preferred stock, $100 par, authorized
PROBLEM 11.4
SHARNES COMMUNICATIONS, INC.
December 31, 20xx__
_
Partial Balance Shee
t
SHARNES COMMUNICATIONS, INC. (concluded
)
*Computation of retained earnings at December 31, 20xx:
441
000
122
200
T
884
200
$
35 Minutes, Strong
a. Par value of all preferred stock outstanding 2,400,000$
c. 900,000$ 2$
Number of shares of common stock outstanding (
$
900,000 ÷
$
2 per share
)
450,000
d. 900,000$
Paid-in capital in excess of par: Common 8,325,000
Par value per share of common stoc
k
Par value of all common stock outstanding
Par value of all common stock issued
PROBLEM 11.5
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.
PROBLEM 11.6
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
corporations have millions of stockholders, including pension funds, mutual funds, and
other corporations. Closely held corporations are usually unable to raise the large amounts
The term convertible means that at the option of the preferred stockholder, each preferred
that investors demand a higher return to induce them to purchase the stock.
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.