DQ1.
DQ5.
ACCOUNTING FOR CORPORATIONS
CHAPTER 13—Solutions
Most large companies are formed as corporations, rather than partnerships be-
issued and then reacquired. The company does not own the stock in the sense
cause corporations offer limited liability, ease of capital generation, ease of
that an outside investor does. For instance, no dividends are paid on treasury
stock, because the company would be paying itself. By buying and holding its
Treasury stock is not considered an investment because it is stock that has been
Discussion Questions
13-1
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DQ9.
DQ10. Return on equity and debt to equity are computed using total stockholders’
Discussion Questions (Concluded)
Companies like to give stock options as compensation because even though,
13-2
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3.
4.
d
SE3. Management Issues
b
SE2. Effect of Start-up and Organization Costs
Start-up and organization costs:
SE4. Stockholders’ Equity
Short Exercises
SE1. Advantages and Disadvantages of a Corporation
Contributed capital:
Common stock, $10 par value, 30,000 shares authorized,
Waldemar Corporation
Balance Sheet
December 31, 2014
Stockholders’ Equity
13-3
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Per Per Dividends
Amount Share Amount Share Allocated
— — — — —
2014
SE5. Preferred Stock Dividends with Dividends in Arrears
Common Stock
Dividends Total
2013
Preferred Stock
Dividends
13-4
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SE7. Issuance of Stock for Noncash Assets
13-5
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(
Mar. 1
SE9. Retirement of Treasury Stock
No entry required.
4,400 $15
shares ×
Declaration of a cash dividend
per share )
(2% × 220,000 shares) on $10 par value common
stock, to be distributed on March 15, at the
market value of stock of $66,000
13-6
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SE12. Stock Split
Geller, Inc
Stockholders’ Equity
August 10, 2014
Contributed capital:
No entry is required, but a memorandum entry for informational purposes should
be prepared.
SE13. Effects of Stockholders’ Equity Actions
Total
Assets
*Rounded
After Stock Split
Total
Liabilities
Stockholders’ Equity
Total
13-7
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‒
*Rounded
SE15. Book Value for Preferred and Common Stock
Common Stock Book
Market Price per Share
Dividends per Share
Dividend Yield =
$3.30
$33.00
Earnings per Share
Market Price per Share
Price/Earnings
(P/E) Ratio =
SE16. Dividend Yield and Price/Earnings Ratio
13-8
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