PROBLEM 11-1B
(a) Jan. 10 Cash (40,000 X $3.60) …………………… 144,000
Common Stock (40,000 X $1) ….. 40,000
Paid-in Capital in Excess of
Stated Value-Common
Stock (90,000 X $3) ……………… 270,000
Sept. 1 Cash (10,000 X $4.40) …………………… 44,000
Common Stock (10,000 X $1) ….. 10,000
Paid-in Capital in Excess of
Stated Value—Common
Stock (10,000 X $3.40) …………. 34,000
(b)
Preferred Stock
Paid-in Capital in Excess of
Par Value—Preferred Stock
3/1 500,000
3/1 10,000
11/1 400,000
11/1 12,000
12/31 Bal. 900,000
12/31 Bal. 22,000
PROBLEM 11-1B (Continued)
Common Stock
Paid-in Capital in Excess of
Stated Value—Common Stock
1/10 40,000
1/10 104,000
5/1 90,000
5/1 270,000
(c) BENNIS CORPORATION
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock, $100 par
value, 10,000 shares
authorized, 9,000 shares
issued …………………………………… $900,000
Common stock, no-par, $1
stated value, 500,000 shares
authorized, 140,000 shares
9/1 10,000
9/1 34,000
12/31 Bal. 408,000
PROBLEM 11-2B
(a) Feb. 1 Cash …………………………..……………….. 160,000
Common Stock (20,000 X $1) ….. 20,000
Nov. 10 Treasury Stock …………………………….. 16,000
Cash ……………………………………… 16,000
Nov. 15 Cash Dividends ($200,000 X .09) …… 18,000
Dividends Payable …………………. 18,000
Dec. 1 Cash Dividends
([1,000,000 – 8,000 + 20,000 –
4,000) X $0.30] …………………………... 302,400
Dividends Payable …………………. 302,400
(b) Preferred Stock
Paid-in Capital in Excess of
Par Value—Preferred Stock
1/1 Bal. 200,000
1/1 Bal. 16,000
12/31 Bal. 200,000
12/31 Bal. 16,000
Paid-in Capital in Excess of
2/1 20,000
2/1 140,000
12/31 Bal. 1,020,000
12/31 Bal. 1,540,000
PROBLEM 11-2B (Continued)
Retained Earnings
Treasury Stock—Common
12/31 320,400
1/1 Bal. 1,716,000
1/1 Bal. 20,000
12/31 408,000
11/10 16,000
(c) WARDEN CORPORATION
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
9% Preferred stock, $50
par value, cumulative,
10,000 shares authorized,
4,000 shares issued and
outstanding …………………………... $ 200,000
value—common stock ……………. 1,540,000
Total additional paid-in
capital …………………………….. 1,556,000
Total paid-in capital ……………. 2,776,000
Retained earnings …………………………………. 1,803,600
12/31 Bal.1,803,600
12/31 Bal. 36,000
11/15 18,000
12/1 302,400
12/31 320,400
12/31 Bal. –0–
PROBLEM 11-2B (Continued)
(d)
Payout ratio= $302,400
$408,000=74.1%
Earnings per share= $408,000–$18,000
PROBLEM 11-3B
PEABODY COMPANY
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
7% Preferred stock, $100 par value,
Additional paid-in capital
Paid-in capital in excess of par
value—preferred stock ……………….. 560,000
Paid-in capital in excess of par
value—common stock ………………… 2,460,000
Total additional paid-in capital … 3,020,000
PROBLEM 11-4B
(a)
Retained Earnings
Dec. 31 380,000
Jan. 1 Balance 800,000
Dec. 31 Net Income 300,000
(b) DONDEC CORPORATION
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
10% Preferred stock, $50 par
500,000 shares authorized,
350,000 shares issued and
outstanding ………………………………….. 3,500,000
Total capital stock ………………. $3,800,000
PROBLEM 11-5B
(a) (1) Cash ……………………………………………………… 452,000
(2) Cash ……………………………………………………… 9,000,000
(3) Treasury Stock (40,000 X $17) ………………… 680,000
PROBLEM 11-5B (Continued)
(b) HARTWELL CORPORATION
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock, $100
shares authorized, 600,000
shares issued, and 560,000
shares outstanding ………………… 2,400,000
Total capital stock ………………. $ 2,800,000
Additional paid-in capital
Paid-in capital in excess of par
PROBLEM 11-6B
FERRIS INC.
Partial Balance Sheet
December 31, 2017
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
2017 2016
(a)
(i) Return on assets
$800,000
$5,312,500 = 15.1%
$900,000
$6,230,000 = 14.4%
(iv) Debt to assets ratio
$2,000,000
$5,000,000 =40%
$1,200,000
$5,610,000 =21.4%
(b) Hercules Company’s net income decreased $100,000 in 2017 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
resulted in the significant improvement in return on common stock–
*PROBLEM 11-8B
(a) Feb. 1 Cash Dividends (80,000 X $1) ……….. 80,000
*80,000 shares X 0.15
31 Common Stock Dividends
Distributable ……………………………… 240,000
Common Stock ……………………… 240,000
*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
7/1 60,000
12/31 Bal. –0–
12/31 Bal. 300,000
2/1 80,000
7/1 300,000
12/1 92,000
12/31 172,000
12/31 300,000
12/31 Bal. –0–
12/31 Bal. –0–
7/31 240,000
12/31 172,000
12/31 500,000
12/31 Bal. 778,000
*PROBLEM 11-8B (Continued)
(c) LAMAR CORPORATION
Partial Balance Sheet
December 31, 2017
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%
a($80,000 + $92,000)