CHAPTER 15
Stockholders’ Equity
SOLUTIONS TO B PROBLEMS
PROBLEM 15-1B
(a)
April 28
Cash (100,000 X $23) ……………………………………….. 2,300,000
July 16
Equipment ………………………………………………………. 76,000
Buildings ………………………………………………………… 240,000
August 8
Treasury Stock (750 X $26) ………………………………. 19,500
Cash ………………………………………………………… 19,500
September 17
PROBLEM 15-1B (Continued)
December 31
Retained Earnings …………………………………………… 467,000
Dividend Payable ………………………………………. 46,000*
December 31
Income Summary …………………………………………….. 96,900
Retained Earnings …………………………………….. 96,900
(b) ALLIGATOR CORPORATION
Stockholders’ Equity
December 31, 2014
Capital stock
Preferred stock—par value $100 per share,
6% cumulative and nonparticipating,
100,000 shares authorized,
PROBLEM 15-2B
(a) Feb. 16 Treasury Stock ($15 X 5,000) …………….. 75,000
Cash ……………………………………….. 75,000
Mar. 8 Cash ($16 X 200) ……………………………… 3,200
Paid-in Capital from Treasury
(b) LLP COMPANY
Stockholders’ Equity
June 30, 2014
Common stock, $1 par value, 120,000 shares
issued, 118,000 shares outstanding ……………… $120,000
Paid-in capital in excess of par—
common stock …………………………………………….. 833,000
Paid-in capital from treasury stock …………………… 6,000
Total paid-in capital ………………………………. 959,000
Retained earnings* ………………………………………….. 666,800
1,625,800
PROBLEM 15-3B
MERRIWEATHER COMPANY
Stockholders’ Equity
December 31, 2015
Capital Stock
Preferred stock, $50 par,
6%, 250,000 shares issued
Additional paid-in capital
In excess of par—preferred stock …………. $ 400,000
In excess of par—common stock ………….. 70,350,000
Supporting balances are indicated in the following T-Accounts.
Preferred Stock
Bal. 10,000,000
2. 2,500,000
12,500,000
Bal. 68,700,000
7. 1,650,000
70,350,000
PROBLEM 15-3B (Continued)
Common Stock
Bal. 5,000,000
6. 30,000
5,030,000
Bal. 12,780,000
Paid-in Capital in Excess of Par—
Preferred Stock
Bal. 350,000
3. 50,000
400,000
1. 300,000
4. 180,000
120,000
5. 15,000
1. Apr. 1 25,000 X $12
2. Jun. 18 50,000 X $50
3. Jun. 18 50,000 X $1
4. Aug. 18 15,000 X $12
PROBLEM 15-4B
-1-
Cash ………………………………………………………………………. 100,000
Discount on Bonds Payable …………………………………….. 1,020
-2-
Land (7,500 X $12) …………………………………………………… 90,000
Common Stock ………………………………………………… 7,500
-3-
Cash ………………………………………………………………………. 68,800
Preferred Stock ………………………………………………… 5,000
Paid-in Capital in Excess of Par—Preferred
Stock ($5,367 – $5,000) …………………………………… 367
Common Stock ………………………………………………… 5,000
PROBLEM 15-4B (Continued)
-4-
Equipment……………………………………………………………….. 21,900
Preferred Stock …………………………………………………. 5,000
Paid-in Capital in Excess of Par—Preferred
PROBLEM 15-5B
(a) Treasury Stock (600 X $13) …………………………... 7,800
Cash ……………………………………………………. 7,800
(d) Cash (400 X $11) ………………………………………….. 4,400
Paid-in Capital from Treasury Stock ……………… 430
Retained Earnings ……………………………………….. 830
Treasury Stock …………………………………….. 5,660*
PROBLEM 15-6B
(a) -1-
Treasury Stock (400 X $73) ………………………………….. 29,200
Cash ……………………………………………………………. 29,200
-2-
-4-
Cash (400 X $78) …………………………………………………. 21,200
Treasury Stock …………………………………………….. 29,200
Paid-in Capital from Treasury Stock (400 X $5) …. 2,000
-5-
PROBLEM 15-6B (Continued)
(b) RED APPLE COMPANY
Stockholders’ Equity
December 31, 2015
Common stock, $60 par value, authorized
25,000 shares; issued 15,000 shares,
14,870 shares outstanding ……………………….. $900,000
(a)
For preferred dividends in arrears:
Retained Earnings …………………………………………………..
24,000
Treasury Stock ……………………………………………….
For 6% preferred current year dividend:
Retained Earnings ………………………………………………..
24,000
For $0.25 per share common dividend:
Retained Earnings ………………………………………………..
124,000
Cash …………………………..……………………………….
124,000*
(b) The suggested cash dividend could be paid even if state law did restrict
the retained earnings balance in the amount of the cost of treasury
PROBLEM 15-7B (Continued)
*Preferred dividends in arrears (5% X $480,000) …..
$ 24,000
Current preferred dividend (5% X $480,000) ……….
24,000
Total balance available ……………………………………..
Transactions:
(a) Assuming Wellington Co. declares and pays a $0.25 per share cash
dividend.
(1) Total assets—decrease $10,250 (41,000 X $0.25]
(b) Wellington declares and issues a 15% stock dividend when the market
price of the stock is $8.
(1) Total assets—no effect
(c) Wellington declares and issues a 40% stock dividend when the market
price of the stock is $7 per share.
(1) Total assets—no effect
(d) Wellington declares and distributes a property dividend.
(1) Total assets—decrease $31,775 (10,250 X $3.10)—$4,100 gain
less $35,875 dividend