Requirement 2
Transaction
Total
Assets
Total
Liabilities
Total
Stockholders’
Equity
Issue common stock
+
NE
+
Declare cash dividends
Pay cash dividends
Purchase treasury stock
NE
Resell treasury stock
+
NE
+
Problem 10-3B (LO 10-6)
Before
After 100%
Stock Dividend
After 2-for-1
Stock Split
Common stock, $0.01 par value
$ 11
$ 22
$ 11
Additional paid-in capital
34,990
34,990
34,990
Retained earnings
Shares outstanding
Share price
Problem 10-4B (LO 10-7)
Requirement 1
No preferred stock has been issued.
Requirement 3
Requirement 4
$45,000,000
Requirement 5
185,000 shares = ($3,700 / $20 per share) in thousands (x 1,000).
Requirement 6
Problem 10-5B (LO 10-7)
Requirement 1
Nautical
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2021
Stockholders’ equity:
Preferred stock, $10 par value
$ 3,000
Common stock, $1.00 par value
Additional paid-in capital
Retained earnings
Treasury stock, 100 shares
Requirement 2
Nautical
Statement of Stockholders’ Equity
For the Year Ended December 31, 2021
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
Stockholders’
Equity
Balance, January 1
$1,250
$3,000
$19,500
$11,500
$ -0-
$35,250
Issue common stock
3,000
27,000
30,000
Issue preferred stock
Declare dividends
Purchase treasury stock
Resell treasury stock
250
Net income
Balance, December 31
3-44 Financial Accounting, 5e
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 10-6B (LO 10-2, 10-3, 10-4, 10-5, 10-7)
Requirement 1
February 2, 2021
Debit
Credit
Cash (1,500,000 x $35)
52,500,000
Common Stock (1,500,000 x $5)
7,500,000
Additional Paid-in Capital (difference)
45,000,000
(Issue common stock above par)
February 4, 2021
Cash (600,000 x $23)
13,800,000
Preferred Stock (600,000 x $20)
Additional Paid-in Capital (difference)
1,800,000
(Issue preferred stock above par)
June 15, 2021
Treasury Stock (150,000 shares x $30)
4,500,000
(Purchase treasury stock)
August 15, 2021
Cash (112,500 shares x $45)
5,062,500
Treasury Stock (112,500 shares x $30)
3,375,000
Additional Paid-in Capital (112,500 x $15)
1,687,500
(Resell treasury stock above cost)
November 1, 2021
Dividends (1,462,500 shares x $1.50) + $480,000)
(Declare cash dividends)
November 30, 2021
Dividends Payable
(Pay cash dividends)
Problem 10-6B (Continued)
Requirement 2
National League Gear
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2021
Stockholders’ equity:
Preferred stock, $20 par value
$12,000,000
Common stock, $5 par value
Retained earnings*
Treasury stock, 37,500 shares
Problem 10-7B (LO 10-8)
Requirement 1
($ in millions)
Net
Income
÷
Average
Stockholders’ Equity
=
Return on
Equity
DC Menswear
÷
=
Requirement 2
Dividends
Per Share
÷
Stock
Price
=
Dividend
Yield
÷
=
Requirement 3
($ in millions)
Stock Price
÷
Earnings Per Share
=
Price-Earnings
Ratio
DC Menswear
$18.93
÷
($833 / 485)
=
11.0
3-48 Financial Accounting, 5e
ADDITIONAL PERSPECTIVES
Continuing Problem: Great Adventures
AP10-1
Requirement 1
November 5, 2022
Debit
Credit
Cash (100,000 x $12)
1,000,000
(Issue common stock above par)
November 16, 2022
Treasury Stock (10,000 shares x $15)
150,000
Cash
150,000
(Purchase treasury stock)
November 24, 2022
Cash (4,000 shares x $16)
64,000
60,000
(Resell treasury stock above cost)
December 1, 2022
Dividends
11,400
Dividends Payable
11,400
(Declare cash dividends)
December 20, 2022
Dividends Payable
11,400
Cash
11,400
(Pay cash dividends)
December 31, 2022
Building
Cash
Requirement 2
Great Adventures, Inc.
Balance Sheet
(Stockholders’ Equity Section)
December 31, 2022
Stockholders’ equity:
Common stock, $1 par value
$ 120,000
Additional paid-in capital
Retained earnings*
Treasury stock, 6,000 shares
3-50 Financial Accounting, 5e
Additional Perspective 10-1 (in General Ledger)
Students will be given the following existing trial balance.
Great Adventures, Inc.
Trial Balance
December 31, 2022
(Prior to transactions in AP10-1)
Accounts
Debit
Credit
Cash
$ 77,968
Accounts Receivable
50,000
Allowance for Uncollectible Accounts
$ 2,400
Prepaid Insurance
Land
Buildings
Equipment
Accumulated Depreciation
Accounts Payable
Deferred Revenue
5,000
Warranty Liability
4,000
Contingent Liability
12,000
Income Tax Payable
14,500
Interest Payable
750
Notes Payable (current)
48,014
Notes Payable (long-term)
Common Stock
Retained Earnings
Service Revenue
Sales Revenue
Interest Revenue
Sales Discounts
Depreciation Expense
17,250
Insurance Expense
Rent Expense
Salaries Expense
Supplies Expense
Bad Debt Expense
Repairs and Maintenance Expense
Warranty Expense
Loss
12,000
Interest Expense
6,785