Accounting Chapter 63 Homework Book Value Per Preferred Share Par Value

Exercise 11–18 (Concluded)

Part 2

ALEXANDER CORPORATION

Statement of Retained Earnings

For Year Ended December 31, 2016

Retained earnings, December 31, 2015 ………………………

$ 340,000

Treasury stock reissuances* …………………………….

Part 3

ALEXANDER CORPORATION

Stockholders’ Equity Section of the Balance Sheet

December 31, 2016

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 ……………………………………….

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.

Part 2

Number of outstanding shares

Issued in (a) …………………………………

10,000

Issued in (b) …………………………………

Issued in (c) …………………………………

Issued in (d) …………………………………

Part 3

Minimum legal capital = Outstanding shares x Par value per share

Part 4

Total paid-in capital from common stockholders

From transaction (a) ……………………

$300,000

From transaction (b) ……………………

From transaction (c) ……………………

80,000

From transaction (d) ……………………

Part 5

Book value per common share

Total stockholders’ equity (given) …

$695,000

Problem 11-2A (60 minutes)

Part 1

Jan. 1

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

Common Dividend Payable ……………………………………

72,000

Cash ………………………………………………………………..

72,000

Paid cash dividend.

July 6

Cash* …………………………………………………………………….

36,000

Treasury Stock, Common** …………………………..

30,000

Paid-In Capital, Treasury Stock*** …………………….

*(1,500 x $24) **(1,500 x $20) ***(1,500 x $4)

Aug. 22

Cash* …………………………………………………………………….

42,500

Retained Earnings …………………………………………………

Treasury Stock, Common** …………………………..

50,000

*(2,500 x $17) **(2,500 x $20)

Sept. 5

Retained Earnings …………………………………………………

80,000

Common Dividend Payable …………………………..

80,000

Oct. 28

Common Dividend Payable ……………………………………

80,000

Cash ………………………………………………………………..

80,000

Paid cash dividend.

Dec. 31

Income Summary …………………………………………………..

Retained Earnings ……………………………………………

Closed Income Summary account.

Problem 11-2A (Concluded)

Part 2

KOHLER CORPORATION

Statement of Retained Earnings

For Year Ended December 31, 2016

Retained earnings, December 31, 2015 ………………………

$270,000

Treasury stock reissuances ……………………………..

Part 3

KOHLER CORPORATION

Stockholders’ Equity Section of the Balance Sheet

December 31, 2016

Common stock⎯$10 par value, 100,000 shares

authorized, 40,000 shares issued and outstanding …..

$400,000

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

Oct. 2

Oct. 25

Oct. 31

Nov. 5

Dec. 1

Dec. 31

Common stock ………….

$360,000

$396,000

Total equity ……………….

$710,000

$920,000

Common stock

Problem 11-4A (45 minutes)

Part 1

Outstanding common shares

Jan. 5

Apr. 5

July 5

Oct. 5

Beginning balance …………………….

40,000

Less treasury stock (Mar. 20) ……..

*(20% x 37,000)

Part 2

Cash dividend amounts

Jan. 5

Apr. 5

July 5

Oct. 5

Outstanding shares ………………….

40,000

37,000

44,400

Dividend per share …………………..

Part 3

Capitalization of retained earnings for small stock dividend

Number of shares ………………………………………………………………

7,400

Market value per share ……………………………………………………….

Part 4

Cost per share of treasury stock

Total amount paid ………………………………………………………………

$ 30,000

Shares purchased ……………………………………………………………..

Part 5

Net income

Retained earnings, beginning balance ………………………………..

$320,000

Less dividends: Jan. 5 ……………………………………………………..

(20,000)

(18,500)

Total before net income ……………………………………………………..

$152,000

?

Retained earnings, ending balance …………………………………….

$400,000

Problem 11-5A (40 minutes)

2. Computation of par values of stock

3. Book values with no dividends in arrears

Book value per preferred share = par value (when not callable) = $50

Common stock

Total equity …………………………………………

$280,000

Less equity for preferred ……………………..

Common stock equity ………………………….

$230,000

Book value per common share …………….

4. Book values with two years’ dividends in arrears

Preferred stock

Preferred stock par value ………………………

$ 50,000

Preferred equity …………………………………….

$ 55,000

Common stock

Total equity …………………………………………..

$280,000

Less equity for preferred ……………………….

Common stock equity …………………………..

$225,000

Book value per common share ………………

Problem 11-5A (Concluded)

5. Book values with call price and two years’ dividends in arrears

Preferred stock

Preferred stock call price (1,000 x $55) …….

$ 55,000

Preferred equity ………………………………………

$ 60,000

Book value per preferred share ……………….

Common stock

Total equity …………………………………………….

$280,000

Less equity for preferred …………………………

6. Dividend allocation in total

Preferred

Common

Total

2 years’ dividends in arrears ………..

$ 5,000

$ 0

$ 5,000

Remainder to common …………………

Totals …………………………………………..

$ 7,500

$ 4,000

$11,500

7. Equity represents the residual interest of owners in the assets of the

business after subtracting claims of creditors. With few exceptions,

PROBLEM SET B

Problem 11-1B (30 minutes)

Part 1

Part 2

Number of outstanding shares

Issued in (a) ……………………………………

3,000

Issued in (b)……………………………………

1,000

Issued in (c) ……………………………………

Issued in (d)……………………………………

Part 3

Minimum legal capital = Outstanding shares x Par value per share

Part 4

Total paid-in capital from common stockholders

Part 5

Book value per common share

Problem 11-2B (60 minutes)

Part 1

Jan. 10

Treasury Stock, Common ………………………………………

480,000

Mar. 2

Retained Earnings …………………………………………………

240,000

Nov. 11

Cash* …………………………………………………………………….

312,000

Nov. 25

Cash* …………………………………………………………………….

152,000

Retained Earnings …………………………………………………

Dec. 1

Retained Earnings …………………………………………………

500,000

Dec. 31

Income Summary …………………………………………………..

Problem 11-2B (Concluded)

Part 2

BALTHUS CORP.

Statement of Retained Earnings

For Year Ended December 31, 2016

Retained earnings, December 31, 2015 ……………………….

$2,160,000

Treasury stock reissuances ……………………………..

Part 3

BALTHUS CORP.

Stockholders’ Equity Section of the Balance Sheet

December 31, 2016

Common stock⎯$1 par value, 320,000 shares

authorized, 200,000 shares issued and outstanding ….

$ 200,000

Retained earnings (from part 2) ………………………………………

Problem 11-3B (45 minutes)

Part 1

Explanations for each of the journal entries

Jan. 17

Declared a cash dividend of $1 per share of common stock.

($96,000 / 96,000 shares)

Mar. 14

Mar. 25

Mar. 31

Part 2

Jan. 17

Feb. 5

Feb. 28

Mar. 14

Mar. 25

Mar. 31

Common stock ……….

$ 960,000

$1,080,000