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PROBLEM 14-4A (Continued)
(d) VEN CORPORATION
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
PROBLEM 14-5A
Preliminary analysis (in thousands)—NOT REQUIRED
Common Stock
1. Issued 50,000
shares for stock
dividend
200
(200)
0
2. Issued 30,000
shares for cash
180
180
3. Corrected error in
SHELLENBURGER INC.
Partial Balance Sheet
December 31, 2017
Stockholders’ equity
Paid-in capital
Capital stock
BYP 14-1 FINANCIAL REPORTING PROBLEM
According to the Consolidated Statements of Shareholders’ Equity, Apple
BYP 14-2 COMPARATIVE ANALYSIS PROBLEM
(a)
PepsiCo
Coca-Cola
Earnings
per share
$6,740 – $1
1,541
= $4.37
$8,584 – $0
4,568
= $1.88
The return on common stockholders’ equity can be used to compare
the profitability of two companies. It shows how many dollars of net
income were earned for each dollar invested by the owners. Since this
ratio is expressed as a percent instead of a dollar amount like earnings
(b) PepsiCo paid cash dividends of $3,434 million and Coca-Cola paid $4,969
million of cash dividends in 2013.
BYP 14-3 COMPARATIVE ANALYSIS PROBLEM
(a)
Amazon
Wal-Mart
Earnings
per share
$274 – $0
457
= $0.60
$16,022 – $0
3,269
= $4.90
BYP 14-4 REAL-WORLD FOCUS
Answers will vary depending on the company chosen by the student.
BYP 14-5 DECISION MAKING ACROSS THE ORGANIZATION
Journal entries—NOT REQUIRED
July 1 Cash Dividends
(140,000 X $0.50) ............................. 70,000
Dividends Payable ........................ 70,000
Aug. 1 Accumulated Depreciation ................ 72,000
Retained Earnings ........................ 72,000
(a) GONZALEZ, INC.
Retained Earnings Statement
For the Year Ended December 31, 2017
Balance, January 1, as previously reported ........ $550,000
Correction of 2016 depreciation ........................... 72,000
BYP 14-5 (Continued)
(b) Treating the overstatement of 2016 depreciation expense as an adjust-
ment of 2017 income would be incorrect because it applies to the prior
year’s income statement and would distort depreciation expense for 2017.
BYP 14-6 COMMUNICATION ACTIVITY
Dear Mom and Dad,
Thanks for calling me about your investments in Gosser Corporation and
Jenks, Inc.
The effect to you as stockholders is the same for both a stock dividend and
a stock split. In each case, the number of shares you own will increase. Following
the stock dividend, you will own 110 shares of Gosser [100 + (100 X 10%)].
After the stock split, you will own 200 shares of Jenks (100 X 2).
The effects of the stock dividend and stock split on the corporations are
limited entirely to the stockholders’ equity sections as follows:
Stockholders’ Equity Item
After Stock Dividend
After Stock Split
Total capital stock
Par value per share
Increase
No change
No change
Decrease
I hope this answers your questions, Mom and Dad. If you have any additional
questions, please give me a call.
Love,
BYP 14-7 ETHICS CASE
(a) The stakeholders in this situation are:
Rob Lowery, president of Molina Corporation.
(b) There is nothing unethical in issuing a stock dividend. But the president’s
order to write a press release convincing the stockholders that the
(c) The stock dividend results in a decrease in retained earnings and an
increase of the same amount in paid-in capital with no change in total
BYP 14-8 ALL ABOUT YOU
Answers will vary depending on the subject of the ethics code.
BYP 14-9 FASB CODIFICATION ACTIVITY
(a) Stock Dividends: An issuance by a corporation of its own common
shares to its common shareholders without consideration and under
conditions indicating that such action is prompted mainly by a
(b) Stock Split: An issuance by a corporation of its own common shares
to its common shareholders without consideration and under conditions
indicating that such action is prompted mainly by a desire to increase
(c) Except for a few instances, the issuance of additional shares of less
IFRS 14-1 INTERNATIONAL FINANCIAL REPORTING PROBLEM
(a) The company declared and paid dividends of €1,501 in 2013 according
to the statement of changes in equity and the statement of cash flows.
