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Exercise 10-15 (LO 10-8)
Requirement 1
($ in millions)
Net
Income
÷
Average
Stockholders’ Equity
=
Return on
Equity
Requirement 2
($ in millions)
Dividends
Per Share
÷
Stock
Price
=
Dividend
Yield
Requirement 3
($ in millions)
Net
Income
÷
Shares Outstanding
=
Earnings per Share
Requirement 4
($ in millions)
Stock
Price
÷
Earnings Per Share
=
Price-Earnings
Ratio
Exercise 10-16 (LO 10-8)
Requirement 1
($ in millions)
Net Income
Minus
Preferred
Dividends
÷
Average Shares
Outstanding
=
Earnings per Share
Requirement 2
($ in millions)
Stock Price
÷
Earnings Per Share
=
Price-Earnings
Ratio
2017
$10.97
÷
$0.73
=
15.0
Exercise 10-17
Requirement 1
January 2
Debit
Credit
Cash
40,000
Common Stock
2,000
January 9
Debit
Credit
Accounts Receivable
14,300
January 10
Debit
Credit
Supplies
4,900
January 12
Debit
Credit
Treasury Stock
18,000
Cash
18,000
(Repurchase treasury stock)
January 15
Debit
Credit
Exercise 10-17 (continued)
Requirement 1 (concluded)
January 29
Debit
Credit
Dividends
3,300
Dividends Payable
3,300
(Declare cash dividends)
Exercise 10-17 (continued)
Requirement 2
(a) January 31
Debit
Credit
Utilities Expense
6,200
Utilities Payable
6,200
(Adjust utilities)
Exercise 10-17 (continued)
Requirement 3
Grand Finale Fireworks
Adjusted Trial Balance
January 31, 2018
Accounts
Debit
Credit
Cash
$83,900
Equipment
64,000
Accumulated Depreciation
10,500
Accounts Payable
3,000
Exercise 10-17 (continued)
Requirement 3 (continued)
Accounts
Ending
Balance
Beginning balance in bold, entries during January in blue, and
adjusting entries in red.
Cash
83,900
=
42,700+40,000−18,000−16,500+49,100+16,600+12,000−42,000
Equipment
64,000
=
64,000
Accumulated Depreciation
10,500
=
9,000+1,500
Exercise 10-17 (continued)
Requirement 4
Grand Finale Fireworks
Income Statement
For the month ended January 31, 2018
Service revenue
$63,400
Salaries expense
42,000
Utilities expense
6,200
Requirement 5
Grand Finale Fireworks
Balance Sheet
January 31, 2018
Assets
Liabilities
Cash
$ 83,900
Accounts payable
$ 3,000
Accounts receivable
42,200
Utilities payable
6,200
Exercise 10-17 (concluded)
Requirement 6
January 31, 2018
Debit
Credit
Service Revenue
63,400
Retained Earnings
63,400
(Close revenue accounts)
Requirement 7
(a) The return on equity is:
Return on
Equity Ratio
=
Net Income
=
$4,400
=
2.9%
Average Stockholders’
Equity
($135,100 + $170,200) / 2
(c) Earnings per share is:
Earnings Per
Share
=
Net Income
=
$4,400
=
0.41
Average Shares Outstanding
(10,000 + 11,600) / 2
PROBLEMS: SET A
Problem 10-1A (LO 10-1)
Terms
__f___ 1. Cumulative.
Definitions
a. The amount invested by stockholders.
b. Shares available to sell.
Problem 10-2A (LO 10-2, 10-3, 10-4, 10-5)
Requirement 1
March 1, 2018
Debit
Credit
Cash (1,100 x $42)
46,200
Common Stock (1,100 x $0.01)
11
May 15, 2018
July 10, 2018
Cash (200 shares x $40)
8,000
October 15, 2018
Requirement 2
Transaction
Total
Assets
Total
Liabilities
Total
Stockholders’
Equity
Issue common stock
+
NE
+
Problem 10-3A (LO 10-6)
Requirement 1
Before
After 100%
Stock Dividend
After 2-for-1
Stock Split
Common stock, $1 par value
$ 1,100
$ 2,200
$ 1,100
Additional paid-in capital
59,000
59,000
59,000
Requirement 2
The primary reason companies declare a large stock dividend or a stock split is to
Problem 10-4A (LO 10-7)
Requirement 1
Requirement 2
Requirement 3
$50 per share. The total paid-in capital for common stock is $900,000 (30,000 x
Requirement 4
(in millions)
Retained earnings, beginning
$250
Requirement 5
Problem 10-5A (LO 10-7)
Requirement 1
Donnie Hilfiger
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2018
Stockholders’ equity:
Preferred stock, $1 par value
$ 500
Common stock, $0.01 par value
51
Requirement 2
Donnie Hilfiger
Statement of Stockholders’ Equity
For the Year Ended December 31, 2018
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
Stockholders’
Equity
Balance, January 1
$300
$40
$ 76,000
$30,500
$ -0-
$106,840
Requirement 3
Items 1 and 2 are similar in that item 1 shows the equity balances in a column
format and item 2 shows these same balances across the bottom row. However,
Problem 10-6A (LO 10-2, 10-3, 10-4, 10-5, 10-7)
Requirement 1
January 2, 2018
Debit
Credit
Cash (110,000 x $70)
7,700,000
Common Stock (110,000 x $1)
110,000
February 14, 2018
Cash (60,000 x $12)
720,000
Preferred Stock (60,000 x $10)
600,000
May 8, 2018
Treasury Stock (11,000 shares x $60)
660,000
May 31, 2018
Cash (5,500 shares x $65)
357,500
Treasury Stock (5,500 shares x $60)
330,000
December 1, 2018
Dividends [(104,500 shares x $0.25) + $36,000]
62,125
December 30, 2018
Requirement 2
Major League Apparel
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2018
Stockholders’ equity:
Preferred stock, $10 par value
$ 600,000
Problem 10-7A (LO 10-8)
Requirement 1
($ in millions)
Net
Income
÷
Average
Stockholders’ Equity
=
Return on
Equity
Requirement 2
Dividends
Per Share
÷
Stock
Price
=
Dividend
Yield
Requirement 3
($ in millions)
Stock
Price
÷
Earnings Per Share
=
Price-Earnings
Ratio
