Exercise 18–12
1. January 23, 2018 ($ in millions)
2. September 3, 2018
Cash (1 million shares x $21)……………………………………………… 21
3. November 4, 2018
Cash (1 million shares x $18)……………………………………………… 18
Exercise 18–13
1. February 12, 2018
($ in millions)
2. June 9, 2019
3. May 25, 2020
* 1 million shares x $13 = $13 million
4. May 25, 2020
* 1 million shares x $13 = $13 million
Exercise 18–14
Requirement 1
Method A – Reacquired shares are treated as treasury stock.
Requirement 2
Reacquired shares that are retired have their status restored to that of
authorized but unissued shares. Although theoretically identical to retired shares,
Treasury stock is reported as a reduction in total shareholders’ equity, not
associated with any specific shareholders’ equity account. By either method,
Treated as treasury stock, the cost of acquiring the shares is debited to the
Exercise 18–15
This is a change in accounting principle.
($ in millions)
Common stock ($1 par x 4 million shares retired)……………………. 4
Paid-in capital—excess of par (average amount above par
UMC applies the new way of reporting reacquired shares retrospectively; that
In each prior period reported, then, UMC would reduce Common stock by $4
The effect of the change on each line item affected should be disclosed for
Exercise 18–16
Requirement 1
($ in
millions)
Requirement 2
($ in
millions)
Common stock (112 million shares x $.01) 1.12
Requirement 3
Ford is referring to the fact that stock options and stock awards increase the
Exercise 18–17
Requirement 1
Retirement of common shares ($ in millions)
Common stock (5 million shares x $1 par per share)………………… 5
Net income closed to retained earnings
Declaration and payment of a cash dividend
Declaration and distribution of a stock dividend
Retained earnings (given)……………………………………………….. 20
Requirement 2
BRENNER-JUDE CORPORATION
Statement of Retained Earnings
FOR THE YEAR ENDED DECEMBER 31, 2018
($ in millions)
Balance at January 1 $ 90
Net income for the year 88
Deductions:
Exercise 18–18
Preferred Common
Exercise 18–19
April 1, 2018
Retained earnings (300,000* shares at $30 per share)……………. 9,000,000
* 10% x 3 million shares issued and outstanding
or, alternatively:
April 1, 2018
June 1, 2018
Exercise 18–20
Requirement 1
**alternatively, retained earnings may be debited
* 100% x 24.5 million shares = 24.5 million shares
Requirement 2
If the per share par value of the shares is not to be changed, the stock
Requirement 3
If Hanmi’s stock price had been $36 at the time of the split, its approximate
Exercise 18–21
Requirement 1
A stock dividend or stock split usually results in some shareholders being
entitled to fractions of whole shares. For instance, if a company declares a
Requirement 2
($ in millions)
Retained earnings (36 million* x $21 per share)………………………… 756
* 4% x 900 million shares = 36 million additional shares