E11–20.
February 20
Retained earnings (-SE) (191.2 million shares x $1.20) ……..
229,440,000
Dividends payable (+L) ………………………………………………
229,440,000
Declaration of dividend.
Dividends payable (-L) ………………………………………………….
229,440,000
Cash (-A) …………………………………………………………………
229,440,000
Payment of dividend.
Shares issued ………………….
Less: Treasury stock …………
Shares outstanding …………..
E11–21.
October 1
Retained earnings (-SE) (3 billion shares x $2.45) …………….
7,350,000,000
Dividends payable (+L) ……………………………………………..
7,350,000,000
Dividends payable (-L) ………………………………………………….
7,350,000,000
Cash (-A) …………………………………………………………………
Financial Accounting, 10/e 11–23
E11–22.
Req. 1
Stockholders’ Equity
Before Stock
Dividend
After Stock
Dividend
Common stock, $12 par value; 65,000 shares authorized;
30,000 shares issued and outstanding (before)
$ 360,000
48,000 shares issued and outstanding (after)
$ 576,000
Additional paid-in capital
Retained earnings
Req. 2
Item
Effects of Stock Dividend
Assets
No change because no assets were disbursed.
Liabilities
No change because no liability was created (no assets were to be
disbursed).
–The common stock account was increased by the same amount.
Req. 3
If the company had announced a stock split, no amounts in the stockholders’ equity
section of the balance sheet would have changed. The company would have simply
E11–23.
Comparative results:
Items
Before Dividend
and Split
After Stock
Dividend
After Stock
Split
Common stock account
$ 600,000
$ 900,000
$ 600,000
Par value per share
$1
$1
Shares outstanding
600,000
900,000
Additional paid-in capital
$ 900,000
$ 900,000
$ 900,000
Retained earnings
$ 700,000
$ 400,000
$ 700,000
$2,200,000
$2,200,000
$2,200,000
E11–24.
Comparative results:
Items
Before
Dividend
After Stock
Dividend
After Cash
Dividend
Common stock account
$ 640,000
$ 896,000
$ 640,000
Par value per share
$8
$8
$ 8
Shares outstanding
80,000
80,000
Additional paid-in capital
$ 280,000
$ 280,000
$ 280,000
Retained earnings
$2,100,000
$1,844,000
$1,940,000
$3,020,000
$3,020,000
$2,860,000
Req. 2
The stock dividend will not affect the statement of cash flows. The amount of the cash
dividend ($160,000) will be reported as a financing activity cash outflow on the
statement of cash flows.
Financial Accounting, 10/e 11–25
E11–25.
Req. 1
MATSUMOTO TRAINING ACADEMIES
Statement of Owners’ Equity
For the Year Ended Year 1
Tanaka capital, Beginning of the year
$ 0
Add: Investments during the year
Add: Net income during the year
Total
Less: Withdrawals during the year
Tanaka capital, End of the year
$ 515,000
Req. 2
GALAXY ROBOTICS
Statement of Owners’ Equity
For the Year Ended Year 1
Curtis
Wilson
Total
Capital, Beginning of the year
$ 0
$ 0
$ 0
Add: Investments during the year
300,000
300,000
600,000
Less: Withdrawals during the year
Capital, End of the year
PROBLEMS
P11–1.
1.
a.
Shares authorized (given) ……………………………………………………….
200,000
c.
Shares outstanding (125,000 – 3,000) …………………………..
122,000
2. Additional paid-in capital: $2,125,000 – (125,000 shares issued x $10 par) =
$875,000.
6. After a 2-for-1 stock split, the par value per share will be cut in half: $10 2 = $5.
The outstanding shares before the split were 125,000 (above). After the split there
will be 250,000 shares outstanding. The treasury stock was acquired after the stock
split occurred.
8. The stock dividend is considered a small stock dividend so the market price is used
in the journal entry:
Retained earnings (-SE) (125,000 shares x .10 x $21) ………
Common stock (+SE) (125,000 shares x .10 x $10) ……….
Additional paid-in capital (+SE) (remainder) ………………….
Financial Accounting, 10/e 11–27
P11–2.
Stockholders’ Equity
Common stock (50,000 shares authorized; 43,000 shares issued and
outstanding) ……………………………………………………………………………
$344,000
Preferred stock (21,000 shares authorized; 6,500 shares issued and
outstanding) ……………………………………………………………………………
$735,000
Calculations:
• Common stock: 43,000 shares x $8 par value.
• Preferred stock: 6,500 shares x $10 par value.
P11–3.
(a)
Cash (+A) (66,000 shares x $9) ……………………………………..
594,000
Common stock (+SE) (66,000 shares x $5) ………………….
330,000
Additional paid-in capital, common stock (+SE)
(remainder) ……………………………………………………………
264,000
.
(b)
Cash (+A) (9,000 shares x $20) ……………………………………..
180,000
Preferred stock (+SE) (9,000 shares x $10) ………………….
Additional paid-in capital, preferred stock (+SE)
(remainder) ……………………………………………………………
(c)
Cash (+A) (1,000 shares x $20) + (2,500 shares x $10) ……
Preferred stock (+SE) (1,000 shares x $10) ………………….
Common stock (+SE) (2,500 shares x $5) ……………………
Additional paid in capital, preferred stock (+SE)
(remainder) ……………………………………………………………
Additional paid-in capital, common stock (+SE)
(remainder) ……………………………………………………………
P11–4.
Req. 1 ($ in millions)
(a)
Cash (+A) ……………………………………………………………………
598
Common stock (+SE) ………………………………………………..
598
(a)
Cash (+A) ……………………………………………………………………
598
552
Financial Accounting, 10/e 11–29
P11–5.
Stockholders’ Equity
Common stock, $1 par value; 200,000 shares authorized; 100,000 shares
issued; 85,000 shares outstanding …………………………………………………..
$ 100,000
P11–6.
Req. 1
A stock dividend involves distributing additional shares of a company’s stock to
existing stockholders. A stock dividend does not affect assets or liabilities; it
Req. 2
Stock dividends are classified as either large or small. A large stock dividend
involves the distribution of additional shares that are more than 20–25% of the
Req. 3
Reselling treasury stock does not affect the income statement, regardless of
Req. 4
A corporation may want to repurchase its stock from existing stockholders for a
number of reasons. One common reason is the existence of an employee bonus
11–30 Solutions Manual
© 2020 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw–Hill Education.
P11–7.
($ in millions)
Req. 1
Treasury stock (+XSE, –SE) …………………………………………..
45,000
Cash (-A) …………………………..…………………………………….
45,000
Cash (+A) ……………………………………………………………………
Treasury stock (-XSE, +SE) ……………………………………….
9
Additional paid-in capital (+SE) …………………………………..
1
P11–8.
Req. 1
Case A—Preferred is noncumulative and the total amount to distribute is $31,000:
Preferred ($120,000 x 10%) …………………………………..
Balance to common ($31,000 – $12,000) ………………..
Per share ……………………………………………………………
$1.50
Preferred
(8,000
Common
(35,000
Case B—Preferred is cumulative and the total amount to distribute is $36,000:
Preferred:
Arrears ($120,000 x 10% x 2 years) …………………….
$24,000
$24,000
Current year ($120,000 x 10%) …………………………..
Per share ……………………………………………………………
Case C—Preferred is cumulative and the total amount to distribute is $90,000:
Preferred:
Arrears ($120,000 x 10% x 2 years) …………………….
$ 24,000
$ 24,000
Current year ($120,000 x 10%) …………………………..
Balance to common ($90,000 – $36,000)
$90,000
Financial Accounting, 10/e 11–31
P11–8. (continued)
Req. 2
Schedule of Comparative Differences
Item
Amount of Dollar Increase (Decrease)
Cash Dividend – Case C
Stock Dividend
Assets
$90,000 decrease in cash
$0, no effect.
(35,000 x .30 x $8).
P11–9.
Req. 1
Heather should not be concerned; dividends paid are reported in the financing activities
section of the statement of cash flows.
Req. 2
To start, you should note that the statement of cash flows reports both cash inflows and
cash outflows, so it is easy for someone to isolate individual accounts to show that a
P11–10.
Req. 1
Stockholders’ Equity
Common stock, $0.01 par value; 200,000 shares authorized;
Req. 2
The dividend yield ratio is 4.23% ([$22,000 52,000 shares] $10). This is the return to
P11–11.
Comparative results:
Items
Before any
Dividends
After Cash
Dividend
After Stock
Dividend
After Stock
Split
Common stock account
$60,000
(given)
$60,000
$120,000
($0.10 x 1.2m)
$60,000
Par value per share
(given)
Shares outstanding
600,000
600,000
Additional paid-in capital
$1,900,000
(given)
$2,760,000
Cash flows from financing
$19,000
$19,000
$19,000