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P13-40A Identifying sources of equity, stock issuance, and dividends
Learning Objectives 1, 2, 4
4. Common stock dividends $402,000
Voyage Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet
at June 30, 2018:
Requirements
1. Identify the different classes of stock that Voyage Comfort Specialists has outstanding.
2. What is the par value per share of Voyage Comfort Specialists’ preferred stock?
3. Make two summary journal entries to record issuance of all the Voyage Comfort Specialists’
stock for cash. Explanations are not required.
4. No preferred dividends are in arrears. Journalize the declaration of a $500,000 dividend at
June 30, 2018, and the payment of the dividend on July 20, 2018. Use separate Dividends
Payable accounts for preferred and common stock. An explanation is not required.
SOLUTION
Requirement 1
P13-40A, cont.
Requirement 3
Requirement 4
P13-41A Journalizing stock issuance and cash dividends and preparing the stockholders’
equity section of the balance sheet
Learning Objectives 2, 4
2. Total Stockholders’ Equity $454,000
D-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter
from the state of Georgia authorizes D-Mobile to issue 50,000 shares of 8%, $50 par value
cumulative preferred stock and 160,000 shares of $4 par value common stock. During the first
month, D-Mobile completed the following transactions:
Oct. 2 Issued 19,000 shares of common stock for a building with a market value of $240,000.
6 Issued 600 shares of preferred stock for $140 per share.
9 Issued 11,000 shares of common stock for cash of $55,000.
10 Declared a $19,000 cash dividend for stockholders of record on Oct. 20. Use a separate
Dividends Payable account for preferred and common stock.
25 Paid the cash dividend.
Requirements
1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of D-Mobile’s balance sheet at October 31, 2018.
Assume D-Mobile’s net income for the month was $94,000.
P13-41A, cont.
SOLUTION
Requirement 1
P13-42A Journalizing dividends and treasury stock transactions and preparing the
stockholders’ equity section of the balance sheet
Learning Objectives 3, 4
Nov. 8 Treasury Stock $4,000
Deerborn Manufacturing Co. completed the following transactions during 2018:
Jan. 16 Declared a cash dividend on the 6%, $103 par noncumulative preferred stock (1,050 shares
outstanding). Declared a $0.20 per share dividend on the 100,000 shares of $2 par value
common stock outstanding. The date of record is January 31, and the payment date is
February 15.
Feb. 15 Paid the cash dividends.
Jun. 10 Split common stock 2-for-1.
Jul. 30 Declared a 30% stock dividend on the common stock. The market value of the common
stock was $9 per share.
Aug. 15 Distributed the stock dividend.
Oct. 26 Purchased 1,000 shares of treasury stock at $8 per share.
Nov. 8 Sold 500 shares of treasury stock for $10 per share.
30 Sold 300 shares of treasury stock for $4 per share.
Requirements
1. Record the transactions in Deerborn’s general journal.
2. Prepare the Deerborn’s stockholders’ equity section of the balance sheet as of December 31,
2018. Assume that Deerborn was authorized to issue 2,600 shares of preferred stock and
400,000 shares of common stock. Both preferred stock and common stock were issued at par.
The ending balance of retained earnings as of December 31, 2018, is $2,060,000.
P13-42A, cont.
SOLUTION
P13-42A, cont.
Requirement 2
P13-43A Preparing an income statement
Learning Objective 5
Net Income $65,500
The following information was taken from the records of Chua Motorsports, Inc. at November
30, 2018:
Selling Expenses
Administrative Expenses
Income from Discontinued Operations
Cost of Goods Sold
Treasury Stock—Common (5,000 shares)
Net Sales Revenue
$ 110,000
115,000
2,500
510,000
75,000
819,000
Common Stock, $12 Par Value, 10,000
shares authorized and issued $ 120,000
Preferred Stock, $7 No-Par Value, 7,000
shares issued 490,000
Income Tax Expense: Continuing
Operations 20,000
Income Tax Expense: Income from
Discontinued Operations 1,000
Prepare a multi-step income statement for Chua Motorsports for the fiscal year ended November
30, 2018. Include earnings per share.
P13-43A, cont.
SOLUTION
