P17-10 (continued)
Schedule 1: Distribution of Remaining Retained Earnings
Common
stock
8%
Preferred
stock
Total
Dividends on common stock at preferred rate
($500,000 x 8%)
$ 40,000
$ 40,000
P17-11
1. 2010
Jan. 4 Cash (3,000 x $25) 75,000
Common Stock, $10 par 30,000
Additional Paid-in Capital
on Common Stock 45,000
P17-11 (continued)
1. (continued)
June 15 Common Stock, $10 par (21,000 x $10) 210,000
value per share and a cost of $10.50 per share.
July 2 Retained Earnings* 27,440
Common Stock To Be Distributed
(1,960 x $6) 11,760
Additional Paid-in Capital from
Stock Dividend 15,680
*42,000 shares issued
Aug. 3 Common Stock To Be Distributed 11,760
Common Stock, $6 Par 11,760
Oct. 1 Allowance for Change in Value of
Investment [2,000 x ($16 – $15)] 2,000
17-43
P17-11 (continued)
1. (continued)
Dec. 31 Retained Earnings 53,960
2. GRAY COMPANY
Stockholders’ Equity
December 31, 2010
Preferred stock (8%, $100 par, 1,600 shares
issued and outstanding) $160,000
P17-12
1. 2010
Jan. 4 Dividends Payable: Preferred
($6 x ½ x 2,000) 6,000
17-44
P17-12 (continued)
1. (continued)
Jan. 5 Cash (500 x $110) 55,000
Preferred Stock, $100 Par 50,000
Premium on Preferred Stock 5,000
May 14 Retained Earnings* 84,250
Common Stock To Be Distributed
(3,370 x $5) 16,850
Additional Paid-in Capital from
Stock Dividend 67,400
June 4 Retained Earnings [(2,000 + 500) x
$6 x ½ year] 7,500
Dividends Payable: Preferred 7,500
29 Common Stock To Be Distributed 16,850
Common Stock, $5 Par 16,850
17-45
P17-12 (continued)
1. (continued)
Aug. 3 Loss on Disposal of Investment
[5,000 x ($9 – 4)] 25,000
Dec . 3 Retained Earnings* 74,226
Dividends Payable: Preferred 7,500
Dividends Payable: Common 66,726
2. JACOBI COMPANY
Stockholders’ Equity
December 31, 2010
Preferred stock (6%, $100 par, 2,500 shares
P17-12 (continued)
2. (continued)
a$17,000 = $12,000 + $5,000
P17-13
1. (1) (a) Retained Earnings (1,200 x $30) 36,000
Common Stock To Be Distributed 12,000
(3) (a) Retained Earnings (150 preferred
shares x $123) 18,450
Preferred Stock To Be Distributed 15,000
Additional Paid-in Capital
From Stock Dividend 3,450
P17-13 (continued)
1. (5) (continued)
(b) Property Dividend Payable 54,000
Investment in West Company Stock 54,000
(6) (a) Retained Earnings [(1,000 x $8) +
(15,000 x $2.00)] 38,000
Contributed Capital Distributed
(1) (2) (3) (4) (5) (6)
Preferred stock
from stock dividend
Contributed capital distributed as a
liquidating dividend on preferred
stock
$100,000
24,000
—
$100,000
—
—
$115,000
3,450
—
$100,000
—
—
$100,000
—
—
$100,000
—
(2,000)
P17-13 (continued)
2.
P17-14
TATE COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2010
Retained earnings, as previously
reported, January 1, 2010 $180,000
Add: Correction of overstatement in 2009
Notes to Financial Statements
Note A: Retained earnings are restricted in the amount of $50,000 in
P17-15
1. (1) Retained Earnings (4,000 x $3) 12,000
Dividends Payable 12,000
17-50
P17-15 (continued)
1. (continued)
Cash 62,500
(4) Accumulated Depreciation ($45,000 – $20,000) 25,000
Retained Earnings 25,000
Income Taxes Payable on Prior Earnings 7,500
2. FASTOR COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2010
Retained earnings, as previously
reported, January 1, 2010 $218,600
Add: Correction of overstatement in 2009
17-51
P17-16
1. 2010
Jan. Preferred Stock (8%), $100 par 100,000
Premium on Capital Stock
Nov. Treasury Stock ($18 x 1,000) 18,000
Cash 18,000
Dec. Retained Earnings 10,500
Dividends Payable: Preferred
[($100 x 0.07) x 1,500] 10,500
17-52
P17-16 (continued)
1. (continued)
Dec. Accumulated Depreciation 8,000
Retained Earnings (gain error) 8,000
2. CORY COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2010
Retained earnings, as previously
reported, January 1, 2010 $182,200
Add: Correction of error in 2009 gain on
sale of equipment (net of $2,400 income taxes) 5,600
Notes to Financial Statements
Note A: Retained earnings are restricted in the amount of $18,000, the cost of
the 1,000 common shares being held as treasury stock.
17-53
P17-17
1. Capital Surplus 30,100
Premium on Common Stock 27,100
Premium on Preferred Stock 3,000
Capital Surplus 16,000
Unrealized Capital from Donation of Land 16,000
2. MARBLE COMPANY
Stockholders’ Equity
December 31, 2010
Preferred stock ($100 par, 300 shares
issued and outstanding) $ 30,000
Common stock ($10 par, 6,500 shares issued
P17-17 (continued)
2. (continued)
Notes to Financial Statements
P17-18 (AICPA adapted solution)
1. ASHWOOD, INC.
Statement of Retained Earnings
For the Year Ended December 31, 2010
Balance, December 31, 2009, as originally reported $ 6,470,000
Add: Prior period adjustment from error
17-55
P17-18 (continued)
2. ASHWOOD, INC.
Stockholders’ Equity Section of Balance Sheet
December 31, 2010
Preferred stock, $50 par value, 9% cumulative,
convertible; 600,000 shares authorized;
100,000 shares issued and outstanding $ 5,000,000
Less: Common stock in treasury, 10,000
shares at cost [$16 x 10,000 (20,000 – 10,000)] (160,000)
Total stockholders’ equity $49,540,000
Schedule 1: Additional Paid-In Capital From Common Stock
P17-19 (AICPA adapted solution)
1. CARR CORPORATION
Statement of Retained Earnings
For the Year Ended December 31, 2010
Balance, December 31, 2009, as originally reported $4,000,000
Deduct: Prior period adjustment from
17-56
P17-19 (continued)
2. CARR CORPORATION
Stockholders’ Equity Section of Balance Sheet
December 31, 2010
Preferred stock, $100 par, 10% cumulative;
100,000 shares authorized; 18,000 shares
Unrealized decrease in value of
marketable equity securities (135,000)
Total stockholders’ equity $17,960,000
aCash dividend on preferred stock for 2010
Shares outstanding 18,000
Stock rights exercised 04/23/10 210,000 1,050,000
Balance 12/31/10 1,210,000 $6,050,000
dAdditional paid-in capital form common stock