PROBLEM 11-2B (Continued)
(d) Payout ratio= $302,400
$408,000 =74.1%
Return on common stockholders’ equity =
PROBLEM 11-3B
PEABODY COMPANY
Partial Balance Sheet
December 31, 2014
Stockholders’ equity
Paid-in capital
Capital stock
7% Preferred stock, $100 par value,
cumulative, 80,000 shares issued
and outstanding …………………………. $8,000,000
Common stock, $10 par value,
Retained earnings ……………………………………… 2,340,000*
Total paid-in capital and
retained earnings …………………. 21,560,000
Less: Treasury stock—common
(20,000 shares) ………………………………… 300,000
PROBLEM 11-4B
(a) Retained Earnings
Dec. 31 380,000 Jan. 1 Balance 800,000
(b) DONDEC CORPORATION
Partial Balance Sheet
December 31, 2014
Stockholders’ equity
Paid-in capital
Capital stock
10% Preferred stock, $50 par
value, cumulative, 20,000
shares authorized, 6,000 shares
Additional paid-in capital
Paid-in capital in excess of par
value—preferred stock ………………….. 250,000
Paid-in capital in excess of par
PROBLEM 11-5B
(a) (1) Cash ……………………………………………………… 452,000
Preferred Stock (4,000 X $100) …………. 400,000
PROBLEM 11-5B (Continued)
(b) HARTWELL CORPORATION
Partial Balance Sheet
December 31, 2014
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock, $100
par value, noncumulative,
Additional paid-in capital
Paid-in capital in excess of par
value—preferred stock …………… 52,000
Paid-in capital in excess of stated
PROBLEM 11-6B
FERRIS INC.
Partial Balance Sheet
December 31, 2014
Stockholders’ equity
Paid-in capital
Common stock, $5 par value, 2,000,000 shares
authorized, 735,000* shares issued, and
710,000 shares outstanding …………………………………….. $3,675,000
Additional paid-in capital
Paid-in capital in excess of par value—
PROBLEM 11-7B
2014 2013
(a) (i) Return on assets
$800,000
$5,312,500 = 15.1% $900,000
$6,230,000 = 14.4%
(ii) Return on common
$800,000 −$40,000
(b) Hercules Company’s net income decreased $100,000 in 2014 even
though its sales remained constant. Its return on assets, 15.1%
PROBLEM 11-7B (Continued)
(d) It appears that the decision to issue bonds and purchase treasury stock
was a wise choice. The bonds require payment of 8% interest which is
less than Hercules 15.1% return on assets. This positive difference
*PROBLEM 11-8B
(a) Feb. 1 Cash Dividends (80,000 X $1.00) …… 80,000
Dividends Payable …………………. 80,000
Mar. 1 Dividends Payable ……………………….. 80,000
Cash ……………………………………… 80,000
Dec. 1 Cash Dividends (92,000 X $1) ……….. 92,000
Dividends Payable …………………. 92,000
31 Income Summary …………………………. 500,000
Retained Earnings …………………. 500,000
*PROBLEM 11-8B (Continued)
(b)
Common Stock Retained Earnings
1/1 Bal. 1,600,000 12/31 300,000 1/1 Bal. 750,000
Paid-in Capital
in Excess of Par Value
Common Stock
Dividends Distributable
1/1 Bal. 240,000 7/31 240,000 7/1 240,000
Cash Dividends Stock Dividends
2/1 80,000
7/1 300,000
*PROBLEM 11-8B (Continued)
(c) LAMAR CORPORATION
Partial Balance Sheet
December 31, 2014
Stockholders’ equity
Paid-in capital
Capital stock
Common stock, $20 par value,
92,000 shares issued and
(d) Payout ratio = $172,000a
$500,000 =34.4%
COMPREHENSIVE PROBLEM SOLUTION
(a) 1. Cash ………………………………………………………..
Preferred Stock …………………………………
49,200
48,000
2. Cash ………………………………………………………..
Common Stock ………………………………….
21,000
9,000
3. Accounts Receivable ………………………………..
Service Revenue ……………………………….
320,000
320,000
6. Supplies …………………………………………………..
Accounts Payable ……………………………..
35,100
35,100
7. Accounts Payable …………………………………….
Cash …………………………………………………
32,200
32,200
10. Cash Dividends ($3,360 + $10,200*) …………..
Dividends Payable …………………………….
13,560
13,560
COMPREHENSIVE PROBLEM SOLUTION (Continued)
Adjusting Entries
1. Supplies Expense ($4,400 + $35,100
–
$5,900)…
Supplies …………………………………………….
33,600
33,600
–
–
(b) KLINGER CORPORATION
Adjusted Trial Balance
12/31/14
Account Debit Credit
Cash ……………………………………………………………
.
$175,200
Accounts Receivable……………………………………
.
87,800
Allowance for Doubtful Accounts …………………
.
$ 3,500
Su
pp
lies ………………………………………………………
.
5,900
.
.
Service Revenue ………………………………………….
.
347,000
Bad Debt Expense ……………………………………….
.
3,700
De
p
reciation Ex
p
ense ………………………………….
.
4,400
pp
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(c) Optional T Accounts
Cash
Bal. 24,600
49,200
A
32,200
11,200
Accounts Receivable
Bal. 45,500
276,000
Supplies
Bal. 4,400
35,100
33,600
A
ccum. Depreciation
—
Buildings
Bal. 22,000
4,400
32,200 Bal. 25,600
35,100
Bal. 28,500
Dividends Payable
13,560
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(c) (Continued)
Common Stock
Bal. 80,000
Paid-in Capital in Excess
of Par Value—C.S.
12,000
Retained Earnings
Bad Debt Expense
3,700
Supplies Expense
33,600
Other Operating Expenses
Income Tax Expense
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(d) KLINGER CORPORATION
Income Statement
For the Year ending December 31, 2014
Service revenue ……………………………………
.
$347,000
Operating expenses
Other operating expenses………………
.
$188,200
.
KLINGER CORPORATION
Statement of Retained Earnings
For the Year ending December 31, 2014
Retained earnings, 1/1/14 …………………………………….. $127,400
COMPREHENSIVE PROBLEM SOLUTION (Continued)
KLINGER CORPORATION
Balance Sheet
At December 31, 2014
A
ssets
Current assets
Cash ………………………………………………… $175,200
Accounts receivable …………………………. $ 87,800
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………..
.
$ 28,500
Income taxes payable………………………..
.
35,130
.
Stockholders’ equity
Paid-in capital
Capital stock
Preferred stock………………………..
.
$48,000
.
.
BYP 11-1 FINANCIAL REPORTING PROBLEM
(a) The common stock has a par value of $0.69 4/9 per share.
(d) $18,360
Payout ratio = = 41.8%
$43,938