Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
675
Exercise 11-17 (30 minutes)
1. Net income …………………………………………………………………………..
$960,000
2. Net income available to common stockholders ………………..
$840,000
Exercise 11-18 (15 minutes)
Stock
Market Value
per Share
Divided
by
Price-Earnings
Ratio
Hilton …..
$176.40
$12.00
=
14.7
Hyatt ……
=
12.5
Accor …..
=
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
Exercise 11-19 (15 minutes)
Stock
Annual Cash
Dividend
Divided
by
Dividend Yield
Etihad ….
$16.06
$220.00
=
7.3%
Exercise 11–20 (20 minutes)
1.
Total stockholders’ equity ………………………………………
$1,585,000
Less equity applicable to preferred shares
2.
Total stockholders’ equity ………………………………………
$1,585,000
Less equity applicable to preferred shares
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
Exercise 11–21 (40 minutes)
Part 1
Jan. 2
Treasury Stock, Common ………………………………………
75,000
Cash ………………………………………………………………..
75,000
Purchased treasury stock (3,000 x $25).
Jan. 7
Retained Earnings …………………………………………………
40,500
Common Dividend Payable …………………………..
40,500
Common Dividend Payable ……………………………………
40,500
Cash ………………………………………………………………..
40,500
Paid cash dividend.
July 9
Cash* …………………………………………………………………….
36,000
Treasury Stock, Common** …………………………..
30,000
Paid-In Capital, Treasury Stock*** …………………….
Reissued treasury stock.
*(1,200 x $30) **(1,200 x $25) ***(1,200 x $5)
Aug. 27
Cash* …………………………………………………………………….
30,000
Paid-In Capital, Treasury Stock …………………………..
6,000
Retained Earnings …………………………………………………
1,500
Treasury Stock, Common** …………………………..
37,500
Reissued treasury stock.
*(1,500 x $20) **(1,500 x $25)
Retained Earnings …………………………………………………
59,400
Common Dividend Payable …………………………..
59,400
Oct. 22
Common Dividend Payable ……………………………………
59,400
Cash ………………………………………………………………..
59,400
Paid cash dividend.
Dec. 31
Income Summary …………………………………………………..
52,000
Retained Earnings ……………………………………………
52,000
Closed Income Summary account.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
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Exercise 11–21 (Concluded)
Part 2
ALEXANDER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, Dec. 31, 2018 ……………………………..
$340,000
Plus net income ………………………………………………………
52,000
Treasury stock reissuances* …………………………..
Part 3
ALEXANDER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2019
Less cost of treasury stock ……………………………………….
Common stock⎯$25 par value, 50,000 shares
authorized, 30,000 shares issued and outstanding;
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
679
PROBLEM SET A
Problem 11-1A (30 minutes)
Part 1
a. To record sale of 10,000 ($250,000/$25 per share) shares of $25 par
value common stock for $30 ($300,000/10,000 shares) per share.
Part 2
Number of outstanding shares
Issued in (a) …………………………………
10,000
Issued in (b) …………………………..…….
Issued in (c) …………………………………
Issued in (d) …………………………..…….
Part 3
Total paid-in capital from common stockholders
From transaction (a) ……………………
$300,000
From transaction (b) ……………………
From transaction (c) ……………………
80,000
From transaction (d) ……………………
Part 4
Book value per common share
Total stockholders’ equity (given) …
$695,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
680
Problem 11-2A (60 minutes)
Part 1
Jan. 2
Treasury Stock, Common ………………………………………
80,000
Cash ………………………………………………………………..
80,000
Purchased treasury stock (4,000 x $20).
Jan. 5
Retained Earnings …………………………………………………
72,000
Common Dividend Payable …………………………..
72,000
Cash ………………………………………………………………..
72,000
Paid cash dividend.
July 6
Cash* …………………………………………………………………….
36,000
Treasury Stock, Common** …………………………..
30,000
Paid-In Capital, Treasury Stock*** …………………….
Reissued treasury stock.
*(1,500 x $24) **(1,500 x $20) ***(1,500 x $4)
Aug. 22
Cash* …………………………………………………………………….
42,500
Paid-In Capital, Treasury Stock …………………………..
6,000
Retained Earnings …………………………………………………
1,500
Treasury Stock, Common** …………………………..
50,000
Reissued treasury stock.
*(2,500 x $17) **(2,500 x $20)
Retained Earnings …………………………………………………
80,000
Common Dividend Payable …………………………..
80,000
Cash ………………………………………………………………..
80,000
Paid cash dividend.
Dec. 31
Income Summary …………………………………………………..
Retained Earnings ……………………………………………
Closed Income Summary account.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
681
Problem 11-2A (Concluded)
Part 2
KOHLER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, Dec. 31, 2018 ……………………………..
$270,000
Treasury stock reissuances …………………………...
Part 3
KOHLER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31, 2019
Common stock⎯$10 par value, 100,000 shares
authorized, 40,000 shares issued and outstanding …..
$400,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
682
Problem 11-3A (45 minutes)
Part 1
Explanations for each of the journal entries
Oct. 2
Declared a cash dividend of $2 per share of common stock.
($60,000 / 30,000 shares)
Oct. 25
Executed a 3-for-1 stock split. ($12 par / $4 par = 3–for-1 ratio)
Part 2
Sep. 30
Beg. Bal.
Oct. 2
Oct. 25
Oct. 31
Nov. 5
Dec. 1
Dec. 31
Common stock ………….
$360,000
$360,000
$360,000
$360,000
$396,000
$396,000
$396,000
Common stock
dividend distributable
0
0
0
36,000
0
0
0
Total equity ……………….
$710,000
$710,000
$710,000
$710,000
$710,000
$920,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
683
Problem 11-4A (45 minutes)
Part 1
Outstanding common shares
Jan. 5
Apr. 5
July 5
Oct. 5
Beginning balance …………………….
40,000
40,000
40,000
40,000
Less treasury stock (Mar. 20) ……..
Part 2
Cash dividend amounts
Jan. 5
Apr. 5
July 5
Oct. 5
Outstanding shares ………………….
40,000
37,000
37,000
44,400
Total dividend ………………………….
Part 3
Capitalization of retained earnings for small stock dividend
Number of shares ………………………………………………………………
7,400
Market value per share ……………………………………………………….
x $12
Total capitalized …………………………………………………………………
$ 88,800
Part 4
Total amount paid ………………………………………………………………
$ 30,000
Shares purchased ……………………………………………………………..
÷ 3,000
Part 5
Net income
Retained earnings, beginning balance ………………………………..
$320,000
Less dividends: Jan. 5 …………………………..…………………………
(20,000)
(18,500)
(18,500)
Total before net income ……………………………………………………..
$152,000
?
Retained earnings, ending balance …………………………………….
$400,000
Therefore, net income = $248,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
Problem 11-5A (40 minutes)
1. Computation of par values of stock
2. Book value with no dividends in arrears
Common stock
Total equity …………………………………………
Less equity for preferred ……………………..
Common stock equity ………………………….
Book value per common share …………….
3. Book value with two years’ dividends in arrears
Common stock
Total equity …………………………………………..
Common stock equity …………………………..
Book value per common share ………………
4. Dividend allocation in total
Preferred
Common
Total
2 years’ dividends in arrears ………..
$ 5,000
$ 0
$ 5,000
Remainder to common …………………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
685
PROBLEM SET B
Problem 11-1B (30 minutes)
Part 1
a. To record sale of 3,000 ($3,000/$1 per share) shares of $1 par value
common stock for $40 ($120,000/3,000) per share.
per share.
Part 2
Number of outstanding shares
Part 3
Total paid-in capital from common stockholders
Part 4
Book value per common share
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
686
Problem 11-2B (60 minutes)
Part 1
Jan. 10
Treasury Stock, Common ………………………………………
480,000
Cash ………………………………………………………………..
480,000
Purchased treasury stock (40,000 x $12).
Mar. 2
Retained Earnings …………………………………………………
240,000
Common Dividend Payable …………………………..
240,000
Mar. 31
Common Dividend Payable ……………………………………
240,000
Cash ………………………………………………………………..
240,000
Paid cash dividend.
Nov. 11
Cash* …………………………………………………………………….
312,000
Treasury Stock, Common** …………………………..
288,000
Paid-In Capital, Treasury Stock*** ……………………..
Reissued treasury stock.
*(24,000 x $13) **(24,000 x $12) ***(24,000 x $1)
Nov. 25
Cash* …………………………………………………………………….
152,000
Paid-In Capital, Treasury Stock …………………………..
24,000
Retained Earnings …………………………………………………
16,000
Treasury Stock, Common** …………………………..
192,000
Reissued treasury stock.
*(16,000 x $9.50) **(16,000 x $12)
Dec. 1
Retained Earnings …………………………………………………
500,000
Common Dividend Payable …………………………..
500,000
Dec. 31
Income Summary …………………………………………………..
Retained Earnings ……………………………………………
Closed Income Summary account.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 11
687
Problem 11-2B (Concluded)
Part 2
BALTHUS CORP.
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, Dec. 31, 2018……………………………….
$2,160,000
Treasury stock reissuances …………………………….
Part 3
BALTHUS CORP.
Stockholders’ Equity Section of the Balance Sheet
December 31, 2019
Common stock⎯$1 par value, 320,000 shares
authorized, 200,000 shares issued and outstanding ….
$ 200,000
Retained earnings (from part 2) ………………………………………