EXERCISE 11-21
DIRK COMPANY
Balance Sheet (Partial)
December 31, 2015
Paid-in capital
Capital stock
Preferred stock …………………………………………. $125,000
Common stock …………………………………………. 500,000
Total capital stock ……………………………….. $ 625,000
Additional paid-in capital
EXERCISE 11-22
(a) PENNINGTON CORPORATION
Income Statement
For the Year Ended December 31, 2015
____________________________________________________________
Net sales ………………………………………………………… $600,000
Cost of goods sold …………………………………………. 360,000
Gross profit ……………………………………………………. 240,000
(b)
Net income – preferred dividends
=
$55,650 – $15,000
=
20.3%
Average common stockholders’ equity
$200,000
EXERCISE 11–23
ALUMINUM COMPANY OF AMERICA
(a) Stockholders’ equity (in millions of dollars)
Paid-in capital
Capital stock
Preferred stock, $100 par value, $3.75
dividend, cumulative, 557,740 shares
authorized, 557,649 shares issued and
546,024 shares outstanding ………………….. $ 56
(b) Total stockholders’ equity …………………………………………….. $11,682
Less: Preferred stock equity (par value) ………………………… 56
*EXERCISE 11-24
(a)
(b)
Total stockholders’ equity
$3,200,000
$3,200,000
Less: Preferred stock equity
Par value
($500,000)
Call price (10,000 X $60)
(600,000)
Dividends in arrears ($10,000 X $4)
(40,000)
Common stock equity
$2,700,000
$2,560,000
Common shares outstanding
200,000
200,000
Book value per share
$13.50
$12.80
SOLUTIONS TO PROBLEMS
PROBLEM 11–1A
(a) Jan. 10 Cash (80,000 X $4) ……………………………. 320,000
Mar. 1 Cash (5,000 X $105) ………………………….. 525,000
Apr. 1 Land ………………………………………………… 85,000
May 1 Cash (80,000 X $4.50)………………………… 360,000
Common Stock (80,000 X $2) ………. 160,000
Aug. 1 Organization Expense ………………………. 30,000
Common Stock (10,000 X $2) ………. 20,000
Sept. 1 Cash (10,000 X $5) ……………………………. 50,000
Common Stock (10,000 X $2) ………. 20,000
PROBLEM 11-1A (Continued)
Nov. 1 Cash (1,000 X $109) ………………………….. 109,000
(b)
Preferred Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Mar. 1
Nov. 1
J5
J5
500,000
100,000
500,000
600,000
Common Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 10
Apr. 1
May 1
Aug. 1
Sept. 1
J5
J5
J5
J5
J5
160,000
48,000
160,000
20,000
20,000
160,000
208,000
368,000
388,000
408,000
Date
Explanation
Ref.
Debit
Credit
Balance
Mar. 1
Nov. 1
J5
J5
25,000
9,000
25,000
34,000
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 10
Apr. 1
May 1
Aug. 1
Sept. 1
J5
J5
J5
J5
J5
160,000
37,000
200,000
10,000
30,000
160,000
197,000
397,000
407,000
437,000
PROBLEM 11-1A (Continued)
(c) DELONG CORPORATION
Paid-in capital
Capital stock
8% Preferred stock, $100 par
value, 10,000 shares
authorized, 6,000 shares
issued and outstanding ……………… $ 600,000
Common stock, no par, $2
PROBLEM 11–2A
(a) Mar. 1 Treasury Stock (5,000 X $8) ………………… 40,000
June 1 Cash (1,000 X $12) ……………………………… 12,000
Sept. 1 Cash (2,000 X $10) ……………………………… 20,000
Dec. 1 Cash (1,000 X $7) ……………………………….. 7,000
31 Income Summary ……………………………….. 30,000
(b)
Paid-in Capital from Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
June 1
Sept. 1
Dec. 1
J10
J10
J10
1,000
4,000
4,000
4,000
8,000
7,000
Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Mar. 1
June 1
Sept. 1
Dec. 1
J10
J10
J10
J10
40,000
8,000
16,000
8,000
40,000
32,000
16,000
8,000
PROBLEM 11-2A (Continued)
Retained Earnings
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Dec. 31
Balance
J10
30,000
100,000
130,000
(c) FECHTER CORPORATION
Stockholders’ equity
Paid-in capital
Capital stock
Common stock, $5 par,
PROBLEM 11–3A
(a) Feb. 1 Cash ………………………………………………. 120,000
Common Stock (25,000 X $1) …….. 25,000
Apr. 14 Cash ………………………………………………. 33,000
Paid-in Capital from
Sept. 3 Patents …………………………………………… 35,000
Common Stock (5,000 X $1) ………. 5,000
Nov. 10 Treasury Stock ……………………………….. 6,000
Dec. 31 Income Summary …………………………….. 452,000
(b)
Preferred Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
400,000
Common Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Feb. 1
Sept. 3
Balance
J5
J5
25,000
5,000
1,000,000
1,025,000
1,030,000
PROBLEM 11-3A (Continued)
Paid-in Capital in Excess of Par—Preferred Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
100,000
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Feb. 1
Sept. 3
Balance
J5
J5
95,000
30,000
1,450,000
1,545,000
1,575,000
Paid-in Capital from Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 14
J5
3,000
3,000
Retained Earnings
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Dec. 31
Balance
J5
452,000
1,816,000
2,268,000
Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Apr. 14
Nov. 10
Balance
J5
J5
6,000
30,000
50,000
20,000
26,000