11–24
EXERCISE 11-2A (cont.)
B&B Partnership
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$129,100
Total Assets
$129,100
Liabilities
$ -0-
Equity
F. Busby, Capital
$51,440
J. Beatty, Capital
77,660
Total Equity
129,100
Total Liabilities and Equity
$129,100
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Receipts from Revenues
Paid for Expenses
Net Cash Flow from Operating Activities
$ 23,600
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Proceeds from Partners
Paid for Partners’ Withdrawals
Net Cash Flow from Financing Activities
105,500
Net Change in Cash
129,100
Plus: Beginning Cash Balance
-0-
11–25
Ending Cash Balance
$129,100
11–26
EXERCISE 11-3A
Transactions:
Issued 2,000 shares of $5 par stock @ $12
$24,000
Revenues
31,000
Expenses
17,100
Dividends Paid
2,000
Astro Corporation
Financial Statements
For the Year Ended December 31, 2016
Income Statement
Revenues
$31,000
Expenses
(17,100)
Net Income
$13,900
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ -0-
Plus: Issuance of Common Stock
24,000
Ending Common Stock
$24,000
Beginning Retained Earnings
-0-
Plus: Net Income
13,900
Less: Dividend
(2,000)
Ending Retained Earnings
11,900
Total Stockholders’ Equity
$35,900
11–27
EXERCISE 11-3A (cont.)
Astro Corporation
Financial Statements
Balance Sheet
As of December 31, 2016
Assets
Cash
$35,900
Total Assets
$35,900
Liabilities
$ -0-
Stockholders’ Equity
Common Stock, $5 par value,
2,000 shares issued and outstanding
$10,000
Paid-In Capital in Excess of Par
14,000
Total Paid-In Capital
24,000
Retained Earnings
11,900
Total Liabilities and Stockholders’ Equity
$35,900
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Receipts from Revenues
$31,000
Paid for Expenses
(17,100)
Net Cash Flow from Operating Activities
$13,900
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Proceeds from Issue of Stock
$24,000
Paid for Dividends
(2,000)
Net Cash Flow from Financing Activities
22,000
Net Change in Cash
35,900
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$35,900
11–28
EXERCISE 11-4A
a.
Balance Sheet
Income Statement
Event
Assets
=
Liab
+
Stockholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
Cash
=
+
Com.
Stk.
+
PIC in
Excess
3/1
96,000
=
NA
+
60,000
+
36,000
NA
−
NA
=
NA
96,000 FA
5/2
180,000
=
NA
+
100,000
+
80,000
NA
−
NA
=
NA
180,000 FA
b.
Common Stock:
6,000 shares x $10 =
$ 60,000
10,000 shares x $10 =
100,000
Total
$160,000
c.
Paid-In Capital in Excess of Par
6,000 shares x ($16 − $10) =
$ 36,000
10,000 shares x ($18 − $10) =
80,000
Total
$116,000
d. Total Paid-In Capital:
Common Stock $160,000
Paid-In Capital in Excess of Par 116,000
Total $276,000
e. Total Assets: Cash $276,000
f.
S&J Iron Corporation General Journal for 2016
Date
Account Titles
Debit
Credit
3/1
Cash
96,000
Common Stock
60,000
Paid-In Capital in Excess of Par
36,000
5/2
Cash
180,000
Common Stock
100,000
Paid-In Capital in Excess of Par
80,000
11–29
11–30
EXERCISE 11-5A
a.
Eastport, Inc. General Journal for 2016
Event
Account Titles
Debit
Credit
1.
Cash (15,000 x $12)
180,000
Common Stock, $10 par
150,000
Paid-In Capital in Excess of Par, CS
30,000
2.
Cash (5,000 x $51)
255,000
Preferred Stock, $50 stated value
250,000
Paid-In Capital in Excess of SV, PS
5,000
3.
Cash (60,000 x $15)
900,000
Common Stock, $10 par
600,000
Paid-In Capital in Excess of Par, CS
300,000
b.
Stockholders’ Equity:
Preferred Stock, $50 stated value, 5% cumulative
class A, 50,000 shares authorized, 5,000 shares
issued and outstanding
$ 250,000
Common Stock, $10 par value, 300,000 shares
authorized, 75,000 shares issued and outstanding
750,000
Paid-In Capital in Excess of SV, Preferred Stock
5,000
Paid-In Capital in Excess of Par, Common Stock
330,000
Retained Earnings
-0-
Total Stockholders’ Equity
$1,335,000
11–31
EXERCISE 11-6A
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.
270,000
=
NA
+
270,000
+
NA
NA
−
NA
=
NA
270,000 FA
2.
156,000
=
150,000
+
NA
+
6,000
NA
−
NA
=
NA
156,000 FA
b.
Mercury Corporation
General Journal for 2016
Event
Account Titles
Debit
Credit
1.
Cash (6,000 x $45)
270,000
Common Stock, No Par
270,000
2.
Cash (3,000 x $52)
156,000
Preferred Stock, $50 par value
150,000
Paid-In Capital in Excess of Par, PS
6,000
EXERCISE 11-7A
11–33
EXERCISE 11-8A
a.
Elroy Corporation
General Journal
Date
Account Titles
Credit
1.
Treasury Stock (4,000 x $30)
Cash
120,000
2.
Cash (900 x $32)
Treasury Stock (900 x $30)
27,000
Paid-In Capital in Excess of Cost, TS
1,880
b.
Treasury Stock
1. 120,000
2. 27,000
Bal. 93,000
11–34
EXERCISE 11-9A
a. & b.
Common Stock
Issued
Outstanding
Beginning Number of Shares
2,000
2,000
Issued This Period
3,000
3,000
Repurchased as Treasury Stock
(500)
Resold Treasury Stock
200
Ending Number of Shares
(b) 5,000
(a) 4,700
c.
JAE Corp.
General Journal for 2016
Date
Account Titles
Credit
1.
Cash (3,000 x $25)
Common Stock, $10 par
30,000
Paid-in Capital in Excess of Par, CS
45,000
2.
Treasury Stock (500 x $26)
Cash
13,000
3.
Cash (200 x $30)
Treasury Stock (200 x $26)
5,200
Paid-In Capital in Excess of Cost, TS
800
Cash (partial)
Common Stock
PIC in Exc. of Par, CS
Bal. not given
Bal. 20,000
Bal. 15,000
1. 75,000
2. 13,000
1. 30,000
1. 45,000
3. 6,000
Bal. 50,000
Bal. 60,000
Treasury Stock
PIC in Excess of Cost,
TS
2. 13,000
3. 5,200
3. 800
Bal. 7,800
Bal. 800
11–35
EXERCISE 11-9A (cont.)
d.
Stockholders’ Equity
Common Stock, $10 par value, 20,000
shares authorized, 5,000 shares issued, and
3,700 shares outstanding
$50,000
Paid-In Capital in Excess of Par, Common
60,000
Paid-In Capital in Excess of Cost, TS
800
Total Paid-In Capital
$110,800
Retained Earnings
82,000
Less: Treasury Stock
(7,800)
Total Stockholders’ Equity
$185,000
11–36
EXERCISE 11-10A
a.
Balance Sheet
Income Statement
Stmt. of
Date
Assets
=
Liab.
+
C. Stk.
+
Ret. Ear.
Rev
−
Exp.
=
Net Inc.
Cash Flow
5/1
NA
=
50,000
+
NA
+
(50,000)
NA
−
NA
=
NA
NA
5/15
NA
=
NA
+
NA
+
NA
NA
−
NA
=
NA
NA
5/31
(50,000)
=
(50,000)
+
NA
+
NA
NA
−
NA
=
NA
(50,000)FA
b.
Love Corporation
General Journal for 2016
Date
Account Titles
Debit
Credit
5/1/16
Dividends
50,000
Dividends Payable
50,000
5/15/16
No Entry
5/31/16
Dividends Payable
50,000
Cash
50,000
Closing Entry
12/31/16
Retained Earnings
50,000
Dividends
50,000
Note: The closing entry is not required in the exercise.
11–37
EXERCISE 11-11A
Computation of Preferred Dividends
Par Value
of Stock
x
Dividend %
=
Dividend
per Share
x
Preferred
Shares
Outstanding
=
Total
Dividends
per Year
$50
x
6%
=
$3.00
x
4,000
=
$12,000
a. Dividend arrearage as of January 1, 2017: $12,000
b.
Dist. to Shareholders
Amount
Preferred
Common
Total Dividend Declared
$25,000
2016 Arrearage
(12,000)
$12,000
2017 Preferred Dividends
(12,000)
12,000
Available for Common Shs.
1,000
Distributed to Common
(1,000)
$1,000
Total Distribution
$24,000
$1,000
EXERCISE 11-12A
a.
Computation of Dividends to Be Paid:
Preferred Stock
$100 par value x 6% x 15,000 shares =
$ 90,000
Common Stock
$.5 x 150,000 shares =
75,000
Total Dividend
$165,000
Debit
11–39
EXERCISE 11-13A
a. Distribution of Dividend:
Distributed to
Shareholders
Preferred
Common
Total Dividend Declared
$175,000
Preferred Arrearage*
(60,000)
$ 60,000
Current Preferred Dividend*
(60,000)
60,000
Available for Common
55,000
Distributed to Common
(55,000)
$55,000
Total
$120,000
$55,000
*$50 X 4% X 30,000 Shares = $60,000
b.
Nowell, Inc.
General Journal for 2016
Date
Account Titles
Debit
Credit
Mar. 8
Dividends
175,000
Dividends Payable
175,000
Mar. 20
No Entry
Mar. 31
Dividends Payable
175,000
Cash
175,000
Closing Entry
Dec. 31
Retained Earnings
175,000
Dividends
175,000
Note: The closing entry is not required in the exercise.
11–40
EXERCISE 11-14A
a. (30,000 shares x .05) x $15 = $22,500
b.
Balance Sheet
Income Statement
Stmt. of
Assets
=
Liab
+
Stockholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
+
C. Stock
+
PIC. Ex.
+
Ret. Ear.
NA
=
NA
+
15,000
+
7,500
+
(22,500)
NA
−
NA
=
NA
NA
c.
Beacon Corporation
General Journal
Account Titles
Debit
Credit
Retained Earnings
22,500
Common Stock, $10 par
15,000
Paid-In Capital in Excess of Par, CS
7,500
11–41
EXERCISE 11–15A
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
11–42
EXERCISE 11-16A
a. The price per share of Discount Drugs should increase substantially.
This increase is a result of the expectation of future profits. The
11–43
EXERCISE 11-17A
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
$700,000
÷
200,000
=
$3.50
Price/Earnings Ratio:
Selling Price/Share
÷
Earnings per Share
=
P/E Ratio
$50.00
÷
$3.50
=
14
River, Inc.:
Earnings Per Share (EPS):
Net Income
÷
Common Shs. Outst.
=
EPS
$960,000
÷
200,000
=
$4.80
Price/Earnings Ratio:
Selling Price/Share
÷
Earnings per Share
=
P/E Ratio
$85.00
÷
$4.80
=
18