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Accounting 23rd Edition Carl S. Warren - Solutions
=+c. What is the balance in Treasury Stock on December 31 of the current year?
=+d. How will the balance in Treasury Stock be reported on the balance sheet?
=+EX 13-12 Treasury stock transactions objs. 5, 6✔b. $54,000 credit Sweet Water Inc. bottles and distributes spring water. On July 15 of the current year, Sweet Water Inc. reacquired 24,000 shares of its common stock at $60 per share. On August 10, Sweet Water Inc. sold 19,000 of the reacquired
=+b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
=+c. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?
=+d. For what reasons might Sweet Water Inc. have purchased the treasury stock?
=+EX 13-13 Treasury stock transactions objs. 5, 6✔b. $37,000 credit The following accounts and their balances were selected from the unadjusted trial balance of REO Inc., a freight forwarder, at October 31, the end of the current fiscal year:Preferred 2% Stock, $100 par . . . . . . . . . . . . .
=+Prepare the Paid-In Capital portion of the Stockholders’ Equity section of the balance sheet. There are 250,000 shares of common stock authorized and 20,000 shares of preferred stock authorized.
=+EX 13-14 Reporting paid-in capital obj. 6✔ Total paid-in capital, $2,225,000 The following accounts and their balances appear in the ledger of Newberry Properties Inc. on June 30 of the current year:Common Stock, $75 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,350,000
=+Prepare the Stockholders’ Equity section of the balance sheet as of June 30. Forty thousand shares of common stock are authorized, and 875 shares have been reacquired.
=+EX 13-15 Stockholders’ Equity section of balance sheet obj. 6✔ Total stockholders’equity, $4,350,000 Race Car Inc. retails racing products for BMWs, Porsches, and Ferraris. The following accounts and their balances appear in the ledger of Race Car Inc. on April 30, the end of the current
=+EX 13-16 Stockholders’ Equity section of balance sheet obj. 6✔ Total stockholders’equity, $5,985,000 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 605 Bancroft Corporation, a manufacturer of industrial pumps, reports the following results for the year ending
=+Prepare a retained earnings statement for the fiscal year ended January 31, 2010.
=+EX 13-17 Retained earnings statement obj. 6✔ Retained earnings, January 31,$3,375,000 List the errors in the following Stockholders’ Equity section of the balance sheet prepared as of the end of the current year.Stockholders’ Equity Paid-in capital:Preferred 2% stock, $150 par(10,000
=+EX 13-18 Stockholders’ Equity section of balance sheet obj. 6✔ Corrected total stockholders’ equity,$16,758,000 The stockholders’ equity T accounts of For All Occasions Greeting Cards Inc. for the current fiscal year ended December 31, 2010, are as follows. Prepare a statement of
=+EX 13-19 Statement of stockholders’ equity obj. 6✔ Total stockholders’ equity, Dec. 31,$7,182,000 Fifty thousand shares of preferred and 200,000 shares of common stock are authorized.There are 5,000 shares of common stock held as treasury stock.Prepare the Stockholders’ Equity section of
=+606 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends Mia Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Mia Restaurant Corporation, which had 40,000 shares of common stock outstanding, declared a 4-for-1 stock split (3
=+a. What will be the number of shares outstanding after the split?
=+b. If the common stock had a market price of $300 per share before the stock split, what would be an approximate market price per share after the split?
=+EX 13-20 Effect of stock split obj. 7 Indicate whether the following actions would (+) increase, () decrease, or (0) not affect Indigo Inc.’s total assets, liabilities, and stockholders’ equity:Stockholders’Assets Liabilities Equity
=+(1) Declaring a cash dividend _____________ _____________ _____________
=+(2) Paying the cash dividend declared in (1) _____________ _____________ _____________
=+(3) Authorizing and issuing stock certificates in a stock split _____________ _____________ _____________
=+(4) Declaring a stock dividend _____________ _____________ _____________
=+(5) Issuing stock certificates for the stock dividend declared in (4) _____________ _____________ _____________
=+EX 13-21 Effect of cash dividend and stock split objs. 4, 7 Selected transactions completed by Hartwell Boating Supply Corporation during the current fiscal year are as follows:
=+Feb. 3. Split the common stock 2 for 1 and reduced the par from $40 to $20 per share. After the split, there were 250,000 common shares outstanding.Apr. 10. Declared semiannual dividends of $1.50 on 18,000 shares of preferred stock and $0.08 on the common stock to stockholders of record on May
=+June 9. Paid the cash dividends.Oct. 10. Declared semiannual dividends of $1.50 on the preferred stock and $0.04 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is
=+Journalize the transactions.
=+EX 13-22 Selected dividend transactions, stock split objs. 4, 7 Crystal Arts, Inc., had earnings of $160,000 for 2010. The company had 20,000 shares of common stock outstanding during the year. In addition, the company issued 2,000 shares of $100 par value preferred stock on January 3, 2010. The
=+Determine the basic earnings per share for Crystal Arts.
=+EX 13-23 EPS Procter & Gamble (P&G) is one of the largest consumer products companies in the world, famous for such brands as Crest ® and Tide®. Financial information for the company for three recent years is as follows:Fiscal Years Ended(in millions)2007 2006 2005
=+Net income $10,340 $8,684 $6,923 Preferred dividends $161 $148 $136 Common shares outstanding 3,159 3,055 2,515
=+a. Determine the earnings per share for fiscal years 2007, 2006, and 2005.
=+b. Evaluate the growth in earnings per share for the three years in comparison to the growth in net income for the three years.
=+EX 13-24 EPS Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 607 Staples and OfficeMax are two companies competing in the retail office supply business. OfficeMax had a net income of $91,721,000 for a recent year, while Staples had a net income of $973,577,000. OfficeMax
=+a. Determine the earnings per share for each company.
=+b. Evaluate the relative profitability of the two companies.
=+EX 13-25 EPS Problem Series A Bridger Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Montana, Idaho, Oregon, and Washington. Bridger Bike Corp. has declared the following annual dividends over a six-year period ending December 31 of each year: 2005, $5,000;
=+1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2005. Summarize the data in tabular form, using the following column headings:Total Preferred Dividends Common Dividends
=+2. Determine the average annual dividend per share for each class of stock for the sixyear period.
=+3. Assuming a market price of $125 for the preferred stock and $8 for the common stock, calculate the average annual percentage return on initial shareholders’investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
=+PR 13-1A Dividends on preferred and common stock obj. 3✔ 1. Common dividends in 2007:$8,000 Sheldon Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Sheldon Optics on October 31 of the current year as follows:Preferred 2% Stock, $80
=+PR 13-2A Stock transaction for corporate expansion obj. 3 608 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends At the annual stockholders’ meeting on December 7, the board of directors presented a plan for modernizing and expanding plant operations at a cost of
=+15,000 shares of the unissued preferred stock be issued through an underwriter, and
=+(c) that a building, valued at $1,850,000, and the land on which it is located, valued at$162,500, be acquired in accordance with preliminary negotiations by the issuance of 17,500 shares of common stock. The plan was approved by the stockholders and accomplished by the following
=+21. Issued 15,000 shares of preferred stock, receiving $84.50 per share in cash.
=+31. Issued 17,500 shares of common stock in exchange for land and a building, according to the plan.
=+No other transactions occurred during January.Instructions
=+Journalize the entries to record the foregoing transactions.Coil Welding Corporation sells and services pipe welding equipment in California. The following selected accounts appear in the ledger of Coil Welding Corporation on February 1, 2010, the beginning of the current fiscal year:Preferred 2%
=+f. Declared cash dividends of $0.50 per share on preferred stock and $0.42 per share on common stock.g. Paid the cash dividends.Instructions
=+Journalize the entries to record the transactions. Identify each entry by letter.
=+PR 13-3A Selected stock transactions objs. 3, 4, 5✔f. Cash dividends,$387,050 Krisch Enterprises Inc. produces aeronautical navigation equipment. The stockholders’ equity accounts of Krisch Enterprises Inc., with balances on January 1, 2010, are as follows:Common Stock, $20 stated value
=+Jan. 6. Paid cash dividends of $0.40 per share on the common stock. The dividend had been properly recorded when declared on November 29 of the preceding fiscal year for $54,000.Mar. 9. Sold all of the treasury stock for $1,350,000.
=+PR 13-4A Entries for selected corporate transactions objs. 3, 4, 5, 6✔ 4. Total stockholders’ equity,$11,407,975 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 609 Apr. 3. Issued 50,000 shares of common stock for $1,700,000.July 30. Declared a 2% stock dividend on
=+31. Closed the credit balance of the income summary account, $400,000.
=+31. Closed the two dividends accounts to Retained Earnings.Instructions
=+1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed.Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.
=+2. Journalize the entries to record the transactions, and post to the eight selected accounts.
=+3. Prepare a retained earnings statement for the year ended December 31, 2010.
=+4. Prepare the Stockholders’ Equity section of the December 31, 2010, balance sheet.Porto Bay Corporation manufactures and distributes leisure clothing. Selected transactions completed by Porto Bay during the current fiscal year are as follows:Jan. 10. Split the common stock 4 for 1 and
=+Apr. 30. Paid the cash dividends.July 9. Purchased 75,000 shares of the corporation’s own common stock at $26, recording the stock at cost.
=+Aug. 29. Sold 40,000 shares of treasury stock at $32, receiving cash.Sept. 1. Declared semiannual dividends of $1.20 on the preferred stock and $0.15 on the common stock (before the stock dividend). In addition, a 1% common
=+stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimated at $30.Oct. 31. Paid the cash dividends and issued the certificates for the common stock dividend.Instructions Journalize the transactions.
=+PR 13-5A Entries for selected corporate transactions objs. 3, 4, 5, 7✔ Sept. 1, Cash dividends, $165,750 Problem Series B Lone Star Theatre Inc. owns and operates movie theaters throughout Arizona and Texas.Lone Star Theatre has declared the following annual dividends over a six-year
=+1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2005.Summarize the data in tabular form, using the following column headings:
=+PR 13-1B Dividends on preferred and common stock obj. 3✔ 1. Common dividends in 2007:$16,500 610 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends Total Preferred Dividends Common Dividends _____________________ _____________________ Year Dividends Total Per Share Total
=+3. Assuming a market price per share of $40 for the preferred stock and $5 for the common stock, calculate the average annual percentage return on initial shareholders’investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
=+On February 28 of the current year, the following accounts and their balances appear in the ledger of Wild Things Corp., a meat processor:Preferred 2% Stock, $25 par (75,000 shares authorized, 30,000 shares issued) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750,000 Paid-In
=+At the annual stockholders’ meeting on April 2, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately$3,650,000. The plan provided (a) that a building, valued at $1,680,000, and the land on which it is located, valued at $420,000, be
=+June 9. Issued 65,000 shares of common stock in exchange for land and a building, according to the plan.13. Issued 21,000 shares of preferred stock, receiving $40 per share in cash.
=+25. Borrowed $700,000 from Wasburn City Bank, giving an 8% mortgage note.No other transactions occurred during June.Instructions
=+Journalize the entries to record the foregoing transactions.
=+PR 13-2B Stock transactions for corporate expansion obj. 3 The following selected accounts appear in the ledger of Okie Environmental Corporation on August 1, 2010, the beginning of the current fiscal year:Preferred 2% Stock, $50 par (40,000 shares authorized, 20,000 shares issued) . . . . . . .
=+a. Issued 17,500 shares of common stock at $81, receiving cash.
=+b. Issued 8,000 shares of preferred 2% stock at $63.
=+c. Purchased 5,000 shares of treasury common for $390,000.
=+PR 13-3B Selected stock transactions objs. 3, 4, 5f. Cash dividends,$73,200 Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 611d. Sold 3,000 shares of treasury common for $240,000.e. Sold 1,000 shares of treasury common for $75,000.f. Declared cash dividends of $1 per
=+Instructions Journalize the entries to record the transactions. Identify each entry by letter.Ivy Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Ivy Enterprises Inc., with balances on January 1, 2010, are as follows:Common Stock, $8 stated value (600,000
=+May 21. Sold all of the treasury stock for $300,000.July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $13 per share.
=+Aug. 15. Issued the certificates for the dividend declared on July 1.vSept. 30. Purchased 10,000 shares of treasury stock for $100,000.
=+Dec. 27. Declared a $0.20-per-share dividend on common stock.
=+31. Closed the credit balance of the income summary account, $485,000.31. Closed the two dividends accounts to Retained Earnings.Instructions
=+1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.
=+2. Journalize the entries to record the transactions, and post to the eight selected accounts.
=+3. Prepare a retained earnings statement for the year ended December 31, 2010.
=+4. Prepare the Stockholders’ Equity section of the December 31, 2010, balance sheet.
=+PR 13-4B Entries for selected corporate transactions objs. 3, 4, 5, 6✔ 4. Total stockholders’ equity,$11,853,400 Selected transactions completed by Kearny Boating Corporation during the current fiscal year are as follows:Jan. 8. Split the common stock 3 for 1 and reduced the par from $75 to
=+May 1. Declared semiannual dividends of $0.80 on 25,000 shares of preferred stock and $0.18 on the common stock to stockholders of record on May 15, payable on June 1.
=+June 1. Paid the cash dividends.Aug. 5. Sold 22,000 shares of treasury stock at $34, receiving cash.Nov. 15. Declared semiannual dividends of $0.80 on the preferred stock and $0.20 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common
=+market value of the common stock is estimated at $40.
=+Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend.Instructions Journalize the transactions.PR 13-5B Entries for selected corporate transactions objs. 3, 4, 5, 7✔ Nov. 15, cash dividends, $138,400 612 Chapter 13 Corporations: Organization, Stock
=+Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’ bankers threatened to sell his stock in order to
=+Comment on the decision of the board of directors in this situation.
=+SA 13-1 Board of directors’actions Jas Bosley and Nadine Jaffe are organizing Precious Metals Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. Jas and Nadine tentatively plan to request authorization for 90,000,000 shares of common stock to be sold to the general public.
=+what might appear to be a “bargain” price.
=+Discuss whether Jas and Nadine are behaving in a professional manner.
=+SA 13-2 Ethics and professional conduct in business Biosciences Unlimited Inc. began operations on January 2, 2010, with the issuance of 100,000 shares of $50 par common stock. The sole stockholders of Biosciences Unlimited Inc. are Rafel Baltis and Dr. Oscar Hansel, who organized Biosciences
=+The following is a conversation between Rafel Baltis, the chief executive officer of Biosciences Unlimited Inc., and Dr. Oscar Hansel, the leading researcher.Rafel: What are we going to do? The banks won’t loan us any more money, and we’ve got to have $10 million to complete the project. We
=+In late 2010, the attorney and the various regulatory authorities approved the new
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