Problem 13-4B (45 minutes)
Part 1
Outstanding common shares
Feb. 15
May 15
Aug. 15
Nov. 15
Beginning balance ………………………
17,000
17,000
17,000
17,000
Part 2
Cash dividend amounts
Feb. 15
May 15
Aug. 15
Nov. 15
Outstanding shares ……………………..
17,000
16,000
18,000
Dividend per share ………………………
Number of shares ……………………………………………………….
Market value per share ……………………………………………………….
Part 4
Cost per share of treasury stock
Total amount paid ……………………………………………………….
Shares purchased ……………………………………………………….
Part 5
Net income
Retained earnings, beginning balance …………………………..
$270,000
792
Problem 13-5B (40 minutes)
2. Computation of stock par values
3. Book value with no dividends in arrears
Common stock
4. Book value with two years’ dividends in arrears
Common stock
Total equity…………………………..……………
$2,400,000
Less preferred stock par value …………..
793
Problem 13-5B (Concluded)
5. Dividend allocation in total
Preferred
Common
Total
2 years’ dividends in arrears …
$ 60,000
$ 0
$ 60,000
Remainder to common ………….
6. Equity represents the residual interest of owners in the assets of the
business after subtracting claims of creditors. With few exceptions, these
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SERIAL PROBLEM — SP 13
Serial Problem — SP 13, Business Solutions (25 minutes)
1a. Journal entry for issuance of common stock to Cicely
1b. Journal entry for issuance of preferred stock to Marcello
1c. Journal entry to record $86,000 borrowed from the bank
2. Evaluation of the three proposals
a. Cicely’s investment as a common shareholder would mean that
Santana would have a second person who would be an owner.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 13
Serial Problem (concluded)
b. Having a preferred shareholder means that Santana’s Uncle
Marcello will not have the same voting rights as Santana. Marcello
c. The loan requires regular monthly payments, so Santana will need
3. There is no correct answer to the question of which proposal Santana
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Reporting in Action — BTN 13-1
(All shares in thousands.)
1. As of September 26, 2015, the shares of common stock issued and
outstanding are 5,578,753 (see balance sheet). As of September 27,
2014, the shares of common stock issued and outstanding are
5,866,161.
2. Total stockholders’ equity as of September 26, 2015 ……$119,355,000,000
3. As found on its statement of cash flows, Apple reported $11,561 million
4. Apple’s income statement reports the following
Fiscal years 2015
2014
2013
6. Answer depends on the financial statement information obtained.
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Comparative Analysis — BTN 13-2
1. Book value per common share = Equity applicable to common shares
Common shares outstanding
2. Earnings per share = Net income
Weighted-average common shares outstanding
4. Price-earnings ratio = Market value per share
Earnings per share
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 13
Ethics Challenge — BTN 13-3
Communicating in Practice — BTN 13-4
Taking It to the Net — BTN 13-5
2. The preferred stock has no par value. There are 165.0 million preferred
4. In 2015, the financing section of the statement of cash flows shows that
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Teamwork in Action — BTN 13-6
1. The team statement should include the following:
a. When a corporation “buys back” its stock (engages in a treasury
stock acquisition), the effect on financial position is a decrease in
2. The team should establish the acquisition entry as follows
Treasury Stock, Common …………………………………..
13,400
a.
Cash ………………………………………………………………………………
13,400
b.
Cash ………………………………………………………………………………
15,000
c.
Cash ………………………………………………………………………………
12,000
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 13
Teamwork in Action (Continued)
d.
Cash ………………………………………………………………………………
12,000
e.
Cash ………………………………………………………………………………
12,000
3. When presenting and explaining the above entries to the team, the
following points should be made by the team members:
The similarities in all reissue entries a through e are:
• The net affect of the transaction is to increase assets and equity by
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Entrepreneurial Decision — BTN 13-7
1.
Plan A
Plan B
Net income ……………………………………………………..
$ 72,000
$ 72,000
2.
Plan A
Plan B
Net income ……………………………………………………..
$ 16,800
$ 16,800
Less preferred dividends ………………………………..
0
Net income for common stockholders …………….
$ 16,800
$375,000
$375,000
3. The difference between the answers for parts 1 and 2 arises from the
percent of return generated with the assets invested in the corporation.
Less preferred dividends ………………………………..
Net income for common stockholders …………….
$ 72,000
$ 62,000
$375,000
$375,000
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802
Hitting the Road — BTN 13-8
Global Decision — BTN 13-9
1. Book value per common share = Equity applicable to common shares
Common shares outstanding
2. Earnings per share:
= (Net income – Preferred dividends) / Weighted-average common shares outstanding
3. Samsung’s EPS is ₩126,304, and Samsung declared ₩21,015 in cash