1. 4.
28,000
28,000
$40,000
24,000
Start-up and organization costs:
Legal services, 24,000 shares of $1 par value common stock
Incorporation fees
Chapter 11, SE 4.
Advantage
Dividends
Declaration of dividends: 140,000 shares
5/15
Dividends Payable
CHAPTER 11—Solutions
STOCKHOLDERS’ EQUITY
Chapter 11, SE 1.
Chapter 11, SE 2.
Chapter 11, SE 3.
Advantage
$200,000
100,000
Per Per Dividends
Amount Share Amount Share Allocated
—— — — —
$16,000
20,000 shares issued, and 19,500 shares outstanding
Chapter 11, SE 5.
Fina Corporation
Balance Sheet
December 31, 2011
Chapter 11, SE 6.
Additional paid-in capital
Stockholders’ Equity
Contributed capital
Common stock, $10 par value, 30,000 shares authorized,
Preferred Stock Common Stock
Dividends Dividends Total
2010
2010 dividends in arrears
2011
1. 30,000
12,500
2. 30,000
2,500
1. 112,000
16,000
96,000
2. 100,000
16,000
84,000
Common Stock
Additional Paid-In Capital
Cash
Cash
Land
Common Stock
Common Stock
Chapter 11, SE 8.
Chapter 11, SE 7.
Common Stock
Additional Paid-In Capital
Land
Oct. 1 40,000
17 12,500
10,000
Oct. 28 3,000
4,500
Chapter 11, SE 9.
Treasury Stock, Common
Cash
Treasury Stock, Common
Common Stock
Additional Paid-In Capital
Chapter 11, SE 10.
Feb. 15
44,000
22,000
Mar. 1
15
44,000
Common stock, $3 par value, 400,000 shares authorized,
375,000 shares issued and outstanding
Contributed capital
Chapter 11, SE 12.
August 10, 2011
66,000
44,000
$1,125,000
Stockholders’ Equity
After Stock Split
Pearl International
Stock Dividends
Additional Paid-In Capital
Common Stock Distributable
No entry required
Common Stock
Common Stock Distributable
1. $50 per share (
1.
(×)
+1,000
÷
Total
Stockholders’ Equity
No effect
Liabilities
No effect
=
No effect
Chapter 11, SE 15.
Total
Assets
Total
shares )
Chapter 11, SE 14.
$500,000
10,000
Chapter 11, SE 13.
shares
1,000
Preferred Stock Book
Value per Share
$8,000
$108
*
1.
2.
1.
2.
The argument that could be given in treating preferred stock as debt instead of
Callable preferred stock gives the company greater flexibility. The company can
eliminate the related dividends at some future date by redeeming the shares at
a specified call price.
Chapter 11, E 2.
Companies like to give stock options as compensation because even though
under new rules stock options create an expense when issued, they do not re-
Chapter 11, E 1.
cause corporations offer limited liability, ease of capital generation, ease of
transfer of ownership, lack of mutual agency, continuous existence, centralized
authority and responsibility, and professional management.
Most large companies are formed as corporations rather than partnerships be-
6/5 17,500
17,500
10/15 90,000
90,000
Dividends
Dividends Payable
Chapter 11, E 5.
Dividends per Share
Market Price per Share
Chapter 11, E 3.
Dividends Yield =
Chapter 11, E 4.
Dividends
Dividends Payable
Declaration of dividends
1. 4. 7.
Quest Corporation
Balance Sheet
December 31, 2011
Chapter 11, E 7.
cumulative, 20,000 shares authorized,
Preferred stock, $100 par value, 9 percent
Stockholders’ Equity
Contributed capital
Chapter 11, E 6.
PP
C
Mar. 1 450,000 Mar. 400,000
2. Stockholders’ equity section of the balance sheet prepared
1
Cash Preferred Stock
Rich Supply Corporation
Stockholders’ Equity
Preferred stock, $100 par value, 6 percent
Contributed capital
March 1, 2011
Balance Sheet
1.
Chapter 11, E 8.
Transactions recorded in T accounts
noncumulative, 20,000 shares authorized,
Total
Per Per Dividends
Amount Share Amount Share Allocated
———— —
( $500,000 × 0.07 $35,000
( $35,000 – ) $10,000
)
$25,000
2011
2010 dividends in arrears
Dividends
2011 dividends
2009
Chapter 11, E 9.
Preferred Stock Common Stock
Dividends
2010
2009 dividends in arrears
Preferred Common
Stock Stock
Dividends Dividends Total
1. $40,000 —$40,000
2.
(× $35,000
(– $ 5,000 $40,000
$30,000 —$30,000
Chapter 11, E 10.
2009 dividends
2011 dividends
$500,000
$40,000
2009 dividends
)
$35,000
0.07
2010 dividends
)
1 125,000
125,000
1 125,000
50,000
1 125,000
1 125,000
5,000
120,000
Chapter 11, E 11.
Entry prepared—$25 par value1.
Entry prepared—no par value
Common Stock
Aug.
Aug. Cash
2. Entry prepared—$10 par value
Cash
Common Stock
Additional Paid-In Capital
Common Stock
Aug. Cash
3.
Aug. Cash
4. Entry prepared—$1 stated value
1 1,200,000
400,000
1 1,200,000
160,000
1,040,000
2011
2011
Additional Paid-In Capital
Entry prepared—$4 stated value
Common Stock
July
3.
Common Stock
2. Entry prepared—no par value
Building
Building
2011
July
Chapter 11, E 12.
Entry prepared—$10 par value1.
May 17 2 May 5 1May 5 128,000 May 17 48,000 3
Bal. 2,400
1=
2=
$40
$44
3,200
shares ×
$128,000
shares ×
52,800
128,000
Chapter 11, E 13.
Cash Treasury Stock, Common
1,200
$52,800
10 21
1 35,000 June 10 8,750 3
20 520 12,250 6
30 14,000 8
—
1=
2=
3=
$35
$35,000
$35
$10,000
$8,750
$40
shares ×
1,000
shares ×
shares ×
250
250
Chapter 11, E 14.
Treasury Stock, Common
10,000
10,150
June
35,000 June 1
Cash
Bal.
June
17 30,000
6,000
24,000
31
10 6,000
6,000
Additional Paid-In Capital
Aug. Common Stock Distributable
No entry required
Chapter 11, E 15.
Common Stock
July Stock Dividends
Common Stock Distributable
Contributed capital
Chapter 11, E 16.
May 15, 2011
Common stock, $1 par value, 250,000 shares authorized,
Contributed capital
Common stock, $0.50 par value, 250,000 shares authorized,
Agat Company
Stockholders’ Equity
Before Stock Split
May 15, 2011
After Stock Split
Agat Company
Stockholders’ Equity
$ 4,800,000
Contributed capital
January 15, 2011
Mendoza International
Mendoza International
Stockholders’ Equity
Chapter 11, E 17.
Common stock, $12 par value, 1,600,000 shares authorized,
Contributed capital
Before Stock Split
Stockholders’ Equity
January 15, 2011
After Stock Split
Common stock, $4 par value, 1,600,000 shares authorized,
1,200,000 shares issued and outstanding
Other
$2 Accumulated
Par Value Additional Compre-
Common Paid-In Retained Treasury hensive
Stock Capital Earnings Stock Income Total
$400,000 $600,000 $2,100,000 $3,100,000
a.
500,000
e. 230,000 230,000
f.
Net income
Cash dividends:
Preferred
$500,000
Chapter 11, E 18.
9%, $100
Par Value
Cumulative
Preferred
Ruff Corporation
Statement of Stockholders’ Equit
y
For the Year Ended December 31, 2012
Stock
Balance, December 31, 2011
Issued 5,000 shares of
preferred stock
537