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11-77
EXERCISE 11-3B (cont.)
Bozeman Corporation
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$179,500
Total Assets
$179,500
Liabilities
$ -0-
Stockholders’ Equity
Common Stock, $10 par value,
10,000 shares issued and outstanding
$100,000
Paid-In Capital in Excess of Par
60,000
Total Paid-In Capital
160,000
Retained Earnings
19,500
Total Liabilities and Stockholders’ Equity
$179,500
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Receipts from Revenues
$71,000
Paid for Expenses
(46,500)
Net Cash Flow from Operating Activities
$ 24,500
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Proceeds from Issue of Stock
$160,000
Paid for Dividends
(5,000)
Net Cash Flow from Financing Activities
155,000
Net Change in Cash
179,500
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$179,500
11-78
EXERCISE 11-4B
a.
Balance Sheet
Income Statement
Stmt. of
Event
Assets
=
Liab
+
Stkholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
Cash
=
+
C. Stk.
+
PIC Exc.
3/1
240,000
=
NA
+
200,000
+
40,000
NA
−
NA
=
NA
240,000 FA
5/2
450,000
=
NA
+
300,000
+
150,000
NA
−
NA
=
NA
450,000 FA
b.
Common Stock:
20,000 shares x $10 =
$200,000
30,000 shares x $10 =
300,000
Total
$500,000
c.
Paid-In Capital in Excess of Par
20,000 shares x ($12 − $10) =
$ 40,000
30,000 shares x ($15 − $10) =
150,000
Total
$190,000
d. Total Paid-In Capital:
Common Stock $500,000
Paid-In Capital in Excess of Par 190,000
Total $690,000
e. Total Assets: Cash $690,000
f.
General Journal
Date
Account Titles
Debit
Credit
3/1
Cash
240,000
Common Stock
200,000
Paid-In Capital in Excess of Par
40,000
5/2
Cash
450,000
Common Stock
300,000
11-79
Paid-In Capital in Excess of Par
150,000
11-80
EXERCISE 11-5B
a.
General Journal
Event
Account Titles
Debit
Credit
1.
Cash (40,000 x $16)
640,000
Common Stock, $10 par
400,000
Paid-In Capital in Excess of Par, CS
240,000
2.
Cash (20,000 x $52)
1,040,000
Preferred Stock, $50 stated value
1,000,000
Paid-In Capital in Excess of SV, PS
40,000
3.
Cash (60,000 x $20)
1,200,000
Common Stock, $10 par
600,000
Paid-In Capital in Excess of Par, CS
600,000
b.
Stockholders’ Equity:
Preferred Stock, $50 stated value, 4% cumulative
class A, 100,000 shares authorized, 20,000 shares
issued and outstanding
$1,000,000
Common Stock, $10 par value, 500,000 shares
authorized, 100,000 shares issued and
outstanding
1,000,000
Paid-In Capital in Excess of SV, Preferred Stock
40,000
Paid-In Capital in Excess of Par, Common Stock
840,000
Retained Earnings
-0-
Total Stockholders’ Equity
$2,880,000
11-81
EXERCISE 11-6B
a.
Balance Sheet
Income Statement
Stmt. of
Event
Assets
=
Stockholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
Cash
=
Pref.
Stock
+
No-Par
C. Stock
+
PIC in
Excess
1.
250,000
=
NA
+
250,000
+
NA
NA
−
NA
=
NA
250,000 FA
2.
126,000
=
120,000
+
NA
+
6,000
NA
−
NA
=
NA
126,000 FA
b.
General Journal
Event
Account Titles
Debit
Credit
1.
Cash
250,000
Common Stock, No Par
250,000
2.
Cash
126,000
Preferred Stock, $40 par value
120,000
Paid-In Capital in Excess of Par, PS
6,000
EXERCISE 11-7B
EXERCISE 11-8B
a.
Earles Corporation
General Journal
Date
Account Titles
Debit
Credit
1.
Treasury Stock (4,000 x $30)
120,000
Cash
120,000
2.
Cash (2,500 x $35)
87,500
Treasury Stock (2,500 x $30)
75,000
Paid-In Capital in Excess of Cost, TS
12,500
11-84
EXERCISE 11-9B
a. & b.
Common Stock
Issued
Outstanding
Beginning Number of Shares
3,000
3,000
Issued This Period
2,000
2,000
Repurchased as Treasury Stock
(500)
Resold Treasury Stock
120
Ending Number of Shares
(b) 5,000
(a) 4,620
c.
Ming Corporation
General Journal
Date
Account Titles
Debit
Credit
1.
Cash (2,000 x $16)
32,000
Common Stock, $10 par
20,000
Paid-in Capital in Excess of Par, CS
12,000
2.
Treasury Stock (500 x $18)
9,000
Cash
9,000
3.
Cash (120 x $20)
2,400
Treasury Stock (120 x $18)
2,160
Paid-In Capital in Excess of Cost, TS
240
Cash (partial)
Common Stock
PIC in Exc. of Par, CS
Bal. not given
Bal. 30,000
Bal. 12,000
1. 32,000
2. 9,000
1. 20,000
1. 12,000
3. 2,400
Bal. 50,000
Bal. 24,000
Bal. unknown
Treasury Stock
PIC in Excess of Cost,
TS
2. 9,000
3. 2,160
3. 240
Bal. 6,840
Bal. 240
11-85
EXERCISE 11-9B (cont.)
d.
Stockholders’ Equity
Common Stock, $10 par value, 50,000
shares authorized, 5,000 shares issued,
and 4,620 shares outstanding
$50,000
Paid-In Capital in Excess of Par, Common
24,000
Paid-In Capital in Excess of Cost, TS
240
Total Paid-In Capital
$74,240
Retained Earnings
46,000
Less: Treasury Stock
(6,840)
Total Stockholders’ Equity
$113,400
11-86
EXERCISE 11-10B
a.
Balance Sheet
Income Statement
Statement
Date
Assets
=
Liab.
+
Com.
Stk.
+
Ret. Ear.
Rev
−
Exp.
=
Net Inc.
of
Cash Flow
10/1
NA
=
50,000
+
NA
+
(50,000)
NA
−
NA
=
NA
NA
11/1
NA
=
NA
+
NA
+
NA
NA
−
NA
=
NA
NA
12/15
(50,000)
=
(50,000)
+
NA
+
NA
NA
−
NA
=
NA
(50,000) FA
b.
Nicholes Corporation
General Journal
Date
Account Titles
Debit
Credit
10/1/16
Dividends
50,000
Dividends Payable
50,000
11/1/16
No Entry
12/15/16
Dividends Payable
50,000
Cash
50,000
12/31/16
Retained Earnings (closing entry)
50,000
Dividends
50,000
Note: Closing entry is not required in the problem.
11-87
EXERCISE 11-11B
Computation of Preferred Dividends:
Par
x
Dividend %
=
Dividend
per Share
x
Number of
Shares
Outstanding
=
Total Preferred
Dividends for
Year
$50
x
5%
=
$2.50
x
10,000
=
$25,000
a. Dividend arrearage as of January 1, 2017: $25,000 (one year)
b.
Dist. to Shareholders
Amount
Preferred
Common
Total Dividend Declared
$65,000
2016 Arrearage
(25,000)
$25,000
2017 Preferred Dividends
(25,000)
25,000
Available for Common
Shs.
15,000
Distributed to Common
(15,000)
$15,000
Total Distribution
$50,000
$15,000
11-88
EXERCISE 11-12B
a.
Computation of Dividends to Be Paid:
Preferred Stock
$100 par value x 4% x 8,000 shares=
$32,000
Common Stock
$.5 x 200,000 shares =
100,000
Total Dividend
$132,000
11-89
EXERCISE 11-13B
a. Distribution of Dividend:
Distributed to
Shareholders
Preferred
Common
Total Dividend Declared
$150,000
Preferred Arrearage*
(60,000)
$60,000
Current Preferred
Dividend*
(60,000)
60,000
Available for Common
30,000
Distributed to Common
(30,000)
$30,000
Total
$120,000
$30,000
*$100 x 4% x 15,000 Shares = $60,000
b.
Tyler Corp.
General Journal for 2016
Date
Account Titles
Debit
Credit
Feb. 1
Dividends
150,000
Dividends Payable
150,000
Mar. 10
No Entry
Mar. 31
Dividends Payable
150,000
Cash
150,000
Closing Entry
Dec. 31
Retained Earnings
150,000
Dividends
150,000
Note: Closing entry is not required in the problem.
11-90
EXERCISE 11-14B
a. (20,000 shares x .04) = 800 shares; 800 shares x $30 = $24,000
b.
Balance Sheet
Income Statement
Stmt. of
Assets
=
Liab
+
Stockholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
Com. Stk.
+
PIC. Ex.
+
Ret. Ear.
NA
=
NA
+
8,000
+
16,000
+
(24,000)
NA
−
NA
=
NA
NA
c.
General Journal
Account Titles
Debit
Credit
Retained Earnings
24,000
Common Stock, $10 par
8,000
Paid-In Capital in Excess of Par, CS
16,000
11-91
EXERCISE 11-15B
a. No formal entry would be made in the accounting records. A memo
entry would indicate the number of shares had tripled and the par
11-92
EXERCISE 11-16B
TCE should pursue the acquisition of the stock of National Mowers, Inc. A
11-93
EXERCISE 11-17B
1. Compute Earnings per Share:
2. Compute Price Earnings Ratio:
Selling Price per Share Earnings per Share
Earnings per Share (EPS):
Net Income
÷
Common Shs. Outst.
=
EPS
$81,000
÷
10,000
=
$8.10
Price/Earnings Ratio:
Selling Price/Share
÷
Earnings per Share
=
P/E Ratio
$130.00
÷
$8.10
=
16
Royal Corporation:
Earnings Per Share (EPS):
Net Income
÷
Common Shs. Outst.
=
EPS
$93,000
÷
10,000
=
9.30
Price/Earnings Ratio:
Selling Price/Share
÷
Earnings per Share
=
P/E Ratio
$120.00
÷
$9.30
=
13
11-94
EXERCISE 11-18B
The P/E ratio is computed by dividing market value per share by earnings
PROBLEM 11-19B
Transactions
Cash Acquired from Owners
$120,000
Revenues
80,000
Expenses
56,000
Withdrawals/Distributions
5,000
11-96
PROBLEM 11-19B a. (cont.)
Best Auto Parts Company
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$139,000
Total Assets
$139,000
Liabilities
$ -0-
Equity
Smart, Capital
139,000
Total Liabilities and Equity
$139,000
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Receipts from Revenues
$ 80,000
Paid for Expenses
(56,000)
Net Cash Flow from Operating Activities
$ 24,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Proceeds from Owner
$120,000
Paid for Owner Withdrawals
(5,000)
Net Cash Flow from Financing Activities
115,000
Net Change in Cash
139,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$139,000
