Weygandt, Accounting Principles, 12e
Chapter Fourteen
Solutions to Challenge Exercises
Challenge Exercise 14-1 – Solution
a) June 15 Cash Dividends (107,000 X $1) …………………………. 107,000
Dividends Payable ………………………………….. 107,000
(b) In the retained earnings statement, dividends of $233,000 will be deducted. In the balance sheet,
Challenge Exercise 14-2 – Solution
(a)
RICHARD TANDY COMPANY
Balance Sheet (Partial)
December 31, 2017
Paid-in capital
Capital stock
Preferred stock …………………………………………………………….. $200,000
Common stock …………………………………………………………….. 500,000
Total capital stock ………………………………………………….. $ 700,000
Additional paid-in capital
Total paid-in capital ……………………………………………………………………. 930,000
Retained earnings ……………………………………………………………………… 504,000*
(b) The return on common stockholders’ equity shows how many dollars of net income were earned for each
dollar invested by the stockholders. It is computed by dividing net income available to common stockholders