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E8.22.
a.
700 shares * 3/2 = 1,050 shares after the stock split
P8.23.
a.
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
1. January 1, 2016 to record stock issuances:
Cash Common Stock
2. December 28, 2017 to record the declaration of dividends:
3. February 12, 2018 to record the payment of dividends:
1. January 1, 2016:
Dr. Cash ((150,000 @ $38) + (90,000 @ $122)) .... ........... ........... 16,680,000
2. December 28, 2017:
3. February 12, 2018:
Dr. Dividends Payable ......... ........... ........... ........... ........... ........... 3,600,000
P8.23.
(continued)
P8.24.
a.
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
1. January 1, 2016 to record stock issuances:
Cash Common Stock
2. December 17, 2018 to record the declaration of dividends:
3. February 9, 2019 to record the payment of dividends:
1. January 1, 2016:
Dr. Cash ((1,750,000 @ $45) + (840,000 @ $105)) ........... ........... 166,950,000
2. December 17, 2018:
3. February 9, 2019:
Dr. Dividends Payable ......... ........... ........... ........... ........... ........... 64,000,000
P8.24.
(continued)
P8.25.
a.
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
May 4, 2016 to record the purchase of 1,200 shares of treasury stock @ $19.25 per share:
Cash Treasury Stock
+ 875
a.
May 4, 2016:
Dr. Treasury Stock ... ........... ........... ........... ........... ........... ........... 23,100
Cr. Cash . ........... ........... ........... ........... ........... ........... ........... 23,100
To record the purchase of 1,200 shares of treasury stock @ $19.25 per share.
P8.26.
a.
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
Cash Treasury Stock
-532,800 -532,800
Dr. Treasury Stock ... ........... ........... ........... ........... ........... ........... 532,800
Cr. Cash ........... ........... ........... ........... ........... ........... ........... 532,800
To record the purchase of 7,200 shares of treasury stock @ $74 per share.
c.
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
Cash Treasury Stock
+ 144,400 + 121,600
Additional
d.
Shares outstanding during second quarter ..... ........... ........... ........... ........... 814,900
Treasury shares sold during third quarter ...... ........... ........... ........... ........... 2,900
Shares outstanding during fourth quarter....... ........... ........... ........... ........... 817,800
P8.27.
Other Paid-in Retained Treasury Net
Cash Assets Liabilities Capital Earnings Stock * Income
a.
+410,000 +410,000
b.
+28,700 -28,700
P8.27.
(continued)
* Note that an increase in treasury stock (for a purchase transaction such as item c) decreases
total stockholders’ equity, and a decrease in treasury stock (for a sale transaction such as item e)
increases total stockholders’ equity. The effects shown are with respect to the Treasury Stock
P8.28.
Other Paid-in Retained Treasury Net
Cash Assets Liabilities Capital Earnings Stock * Income
a.
+144,450 +144,450
P8.28.
(continued)
c.
Dr. Building ($53 per share * 5,000 shares) ........... ........... ........... 265,000
Cr. Preferred Stock ($50 per share * 5,000 shares) ....... ........... 250,000
P8.29.
Other Paid-in Retained Treasury Net
Cash Assets Liabilities Capital Earnings Stock * Income
a.
+ 180,000 + 180,000
b.
+ 80,000 + 80,000
c.
- 6,400 - 6,400
* Note that an increase in treasury stock (for a purchase transaction such as item d) decreases
total stockholders’ equity, and a decrease in treasury stock (for a sale transaction such as item f)
a.
Dr. Cash ....... ........... ........... ........... ........... ........... ........... ........... 180,000
Cr. Common Stock ($1 per share * 10,000 shares) ....... ........... 10,000
Cr. Additional Paid-In Capital ($17 per share * 10,000 shares) 170,000
P8.29.
(continued)
d.
Dr. Treasury Stock ($9,500 / 500 shares = $19 per share) .. ........... 9,500
Cr. Cash . ........... ........... ........... ........... ........... ........... ........... 9,500
P8.30.
Other Paid-in Retained Treasury Net
Cash Assets Liabilities Capital Earnings Stock * Income
a.
+ 600,000 + 600,000
b.
+ 756,000 + 756,000
P8.30.
e.
(continued)
Dr. Cash ($17 per share * 18,000 shares) .... ........... ........... ........... 306,000
Cr. Treasury Stock ($15 per share * 18,000 shares) ...... ........... 270,000
P8.31.
a.
Annual dividend per share (12% * $60) ........ ........... ........... ........... $ 7.20
Number of shares outstanding ........... ........... ........... ........... ........... 1,000
Annual dividend requirement ........... ........... ........... ........... ........... $7,200
d.
Additional
Common Stock Paid-in Capital
November 30, 2016.... ........... ........... ........... ........... $120,000 $270,000
e.
Treasury stock was resold at a price greater than its cost.
f.
Retained earnings, January 1, 2016 ... ........... ........... ........... ........... $45,150
Add: Net income ........ ........... ........... ........... ........... ........... ........... 12,000
Less: Preferred stock dividends (see answer to part a) ......... ........... (7,200)
Less: Common stock dividends ......... ........... ........... ........... ........... ? .
P8.32.
a.
Common stock = ($5 par value * 150,000 shares issued) = $750,000
b.
Price per share = Increase in paid-in capital / Number of shares issued.
Increase in common stock ($750,000 - $675,000)..... ........... ........... ........... $ 75,000
c.
Increase in cost of treasury stock ($1,101,000 - $1,037,000) ........... ........... $64,000
/ Increase in number of shares of treasury stock (18,000 – 17,000) . ........... 1,000
= Cost per share ........ ........... ........... ........... ........... ........... ........... ........... $64
d.
Retained earnings, April 30, 2016 ..... ........... ........... ........... ........... ........... $8,660,000
Add: Net income ....... ........... ........... ........... ........... ........... ........... ........... ?
e.
1. Shares outstanding = (150,000 shares issued - 18,000 treasury shares) = 132,000
Total cash dividend = ($0.30 dividend per share * 132,000 outstanding) = $39,600
f.
Number of dividend shares = (5% dividend rate * 150,000 shares issued) = 7,500
Balance Sheet Income Statement .
Assets = Liabilities + Stockholders’ Equity Net income = Revenues - Expenses
Retained Earnings
- 495,000
P8.32.
(continued)
g.
1. New par value will be 1/2 of prior par value = ($5 / 2) = $2.50. The number of
2. The market price will drop to about 1/2 of the pre-split market price = (1/2 * $66) = $33
C8.33.
It should be possible for most students to find note disclosures concerning the primary
stockholders’ equity items commonly found on corporate balance sheets:
2) retained earnings, including information concerning dividends,
4) treasury stock, and
5) noncontrolling interest.
Details concerning the changes in these items are commonly reported in the
C8.34.
a.
Par value per share of preferred stock = ($5,760,000 balance sheet amount / 96,000
shares issued) = $60 par value per share
Preferred stock dividend percentage = ($4.50 dividend per share / $60 par value per
