Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
747
Exercise 11-16 (10 minutes)
Retained earnings, Dec. 31, prior year, as previously reported
$ 60,000
Prior period adjustment
Correction of error (net of tax) …………………………………………..
12,000
Retained earnings, Dec. 31, prior year, as adjusted……………….
Exercise 11-17 (15 minutes)
Tidal Co.
Statement of Retained Earnings
For Current Year Ended December 31
Retained earnings, Dec. 31, prior year
………………………………………………………………………………………….
$ 60,000
………………………………………………………………………………………….
………………………………………………………………………………………….
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Exercise 11-18 (15 minutes)
Amos Company
Statement of Retained Earnings
For Current Year Ended December 31
Retained earnings, Dec. 31, prior year, as previously reported
$1,375,000
Prior period adjustment
Retained earnings, Dec. 31, prior year, as adjusted……………….
Plus net income …………………………………………………………………..
Exercise 11-19 (15 minutes)
Hulu Inc.
Statement of Stockholders’ Equity
For Year Ended December 31
Common
Stock
Paid-In Capital in
Excess of Par
Retained
Earnings
Treasury
Stock
Total
Equity
Beginning balance
$300
$ 9,700
$20,000
$30,000
Issuance of common stock
Purchase of treasury stock
Cash dividends
____
(4,000)
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
Exercise 11–20 (25 minutes)
1. Net income ……………………………………………………………………
$2,700,000
2. Net income available to common stockholders ………………
$2,311,980
Divided by weighted-average outstanding shares ………….
Exercise 11–21 (30 minutes)
1. Net income available to common stockholders* ………….
$840,000
Divided by weighted-average outstanding shares ……….
400,000
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Exercise 11–22 (15 minutes)
Stock
Market Value
per Share
Divided
by
Earnings
per Share
Price-Earnings
Ratio
Hilton …
$176.40
$12.00
=
14.7
SPG …..
=
9.6
=
=
5.0
Exercise 11–23 (15 minutes)
Stock
Annual Cash
Dividend
Divided
by
Market
Value
Dividend Yield
Etihad ..
$16.06
$220.00
=
7.3%
=
3.96
=
5.5
Allied …
=
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Exercise 11-24 (40 minutes)
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* …………………………………………………………..
31,500
Paid-In Capital, Treasury Stock …………………….
6,000
Treasury Stock, Common** ……………………..
37,500
Reissued treasury stock.
*1,500 x $21 **1,500 x $25
Sept. 9
Retained Earnings ………………………………………..
59,400
Common Dividend Payable ……………………..
59,400
Declared $2 dividend on 29,700 outstanding shares.
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 & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
752
Exercise 11-24 (Concluded)
2.
ALEX CORPORATION
Statement of Retained Earnings
For Current Year Ended December 31
Retained earnings, Dec. 31, prior year ………………………
$340,000
3.
ALEX CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31
Common stock⎯$25 par value, 50,000 shares
authorized, 30,000 shares issued and outstanding;
300 shares in treasury ……………………………………………
$ 750,000
Less cost of treasury stock………………………………………
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
753
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.
common stock for $40 ($120,000/3,000 shares) per share.
Part 2
Number of outstanding shares
Issued in (a) ………………………………..
10,000
Issued in (c) ………………………………..
Part 3
Total paid-in capital from common stockholders
From transaction (a) …………………..
$300,000
From transaction (b) ………………….
From transaction (d) ………………….
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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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* …………………………………………………………..
48,000
Treasury Stock, Common** ……………………..
40,000
Paid-In Capital, Treasury Stock ……………….
8,000
Reissued treasury stock.
*2,000 x $24 **2,000 x $20
Aug. 22
Cash* …………………………………………………………..
32,000
Paid-In Capital, Treasury Stock …………………….
8,000
Treasury Stock, Common** ……………………..
40,000
Reissued treasury stock.
*2,000 x $16 **2,000 x $20
Retained Earnings ………………………………………..
80,000
Common Dividend Payable ……………………..
80,000
Oct. 28
Common Dividend Payable …………………………..
80,000
Paid cash dividend.
Dec. 31
Income Summary …………………………………………
Retained Earnings …………………………………..
Closed Income Summary account.
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Problem 11-2A (Concluded)
Part 2
KOHLER CORPORATION
Statement of Retained Earnings
For Current Year Ended December 31
Retained earnings, Dec. 31, prior year ………………………
$270,000
Part 3
KOHLER CORPORATION
Stockholders’ Equity Section of the Balance Sheet
December 31
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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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
Total equity ……………
$710,000
$710,000
$710,000
$710,000
$710,000
$920,000
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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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
Cost per share of treasury stock
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 & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Problem 11-5A (25 minutes)
1. Computation of par values of stock
2. Dividend allocation to preferred and common shareholders
(a)
Preferred
(b)
Common
Total
2 years’ dividends in arrears ….
$ 5,000*
$ 0
$ 5,000
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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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.
b. To record issuance of 1,000 ($1,000/$1 per share) shares of $1 par value
Part 2
Number of outstanding shares
Issued in (a) ……………………………….
3,000
Issued in (b) ……………………………….
1,000
Issued in (c) ……………………………….
Part 3
Total paid-in capital from common stockholders
From transaction (a) …………………..
$120,000
From transaction (b) …………………..
From transaction (c) …………………..
Wild & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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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*** …………..
24,000
Reissued treasury stock.
*24,000 x $13 **24,000 x $12 ***24,000 x $1
Nov. 25
Cash* ………………………………………………………….
Treasury Stock, Common** …………………….
192,000
Reissued treasury stock.
*16,000 x $10.50 **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 & Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 11
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Problem 11-2B (Concluded)
Part 2
BALTHUS CORP.
Statement of Retained Earnings
For Current Year Ended December 31
Retained earnings, Dec. 31, prior year ………………………
$2,160,000
Part 3
BALTHUS CORP.
Stockholders’ Equity Section of the Balance Sheet
December 31
Common stock⎯$1 par value, 320,000 shares
authorized, 200,000 shares issued and outstanding …
$ 200,000
Paid in capital in excess of par value, common stock ….
Retained earnings (from part 2) ……………………………………..