Stockholders’ Equity Chapter 13 Exercises

Issuing Stock In-Class Exercise (Form groups and work exercise): Exercise Page E13- 22 788 Stock Issue Transactions (Use the format, as reflected on the next slide, to complete this exercise)

Issuing Stock General Journal Exercise Page Date Description Debit Credit Exercise Page E13- 22 788 Issuing Stock at Par and No-Par

Issuing Stock Exercise E13-22: The charter of Evergreen Capital Corporation authorizes the issuance of 900 shares of preferred stock and 1,250 shares of common stock. During a two-month period, Evergreen completed these stock issuance transactions: Mar. 23 Issues 230 shares of $4 par value common stock for cash of $5 per share. Apr. 12 Received inventory with a market value of $23,000 and equipment with a market value of $20,000 for 320 shares of the $4 par value common stock. 17 Issued 900 shares of 5%, $20 par value preferred stock for $20 per share. Requirements: (1) Record the transactions in the general journal. (2) Prepare the stockholders’ equity section of the Evergreen balance sheet as of April 30, 2014. Retained Earnings balance is $79,000.

Issuing Stock

Issuing Stock

Issuing Stock End of Exercise

Cash Dividends In-Class Exercise (Form groups and work exercises): Exercise Page E13-23 788 Dividends-Common/Preferred (Cumulative)

Cash Dividends Exercise E13-23: Northern Communications has the following stockholders’ equity: Preferred Stock – 6%, $11 Par Value; 150,000 shares authorized, 20,000 shares issued and outstanding…….. $ 220,000 Common Stock -- $3 Par Value; 575,000 shares authorized, 400,000 shares issued and outstanding…… $1,200,000 Retained Earnings……………………………………………... $ 190,000 Requirements: (1) Assuming the preferred stock is cumulative, compute the amount of dividends to preferred stockholders and stockholders for 2014 and 2015 if total dividend are if total dividends are $12,200 in 2014 and $55,000 in 2015. (2) Record the journal entries for 2014, assuming that Northern declared the dividend on December 1 for stockholders of record on December 10. Northern paid the dividend on December 20. (3) Record the journal entries for 2015, assuming that Northern declared the dividend on December 1 for stockholders of record on December 15. Northern paid the dividend on December 28.

Preferred Dividend Requirement Cash Dividends Preferred Dividend Requirement Note: Preferred stockholders are entitled to no more than $13,200 in any one year as follow: (a) $11 par value x 6% = $.66 per share (b) $.66 x 20,000 shares = $13,200

Preferred dividends in arrears $13.200 - $12,200 = $1,000 Cash Dividends Preferred dividends in arrears $13.200 - $12,200 = $1,000

Cash Dividends

Cash Dividends Note: Preferred stockholders are entitled to the same $13,200 dividend requirement as in year 2014

Cash Dividends

Cash Dividends

Cash Dividends

Cash Dividends End of Exercise

Cash and Stock Dividends In-Class Exercise (Form groups and work exercise): Exercise Page E13-26 790 Cash and Stock Dividends (Use the format, as reflected on the next slide, to complete this exercise)

Cash and Stock Dividends General Journal Date Description Debit Credit Exercise Page E13-26 790 Cash and Stock Dividends

Cash and Stock Dividends Exercise E13-26: Painting Schools, Inc. is authorized to issue 200,000 shares of $1 par common stock. The company issued 77,000 shares at $3 per share. When the market price of common stock was $5 per share, Painting declared and distributed a 10% stock dividend. Later, Painting declared and paid a $0.25 per share cash dividend. Requirements: (1) Journalize the declaration and the distribution of the stock dividend. (2) Journalize the declaration and the payment of the cash dividend.

Cash and Stock Dividends Dividend Shares Computation 77,000 shares x 10% = 7,700 shares 7,700 shares x $5 = $38,500

Cash and Stock Dividends 7,700 shares x $1 = $7,700

Cash and Stock Dividends Common

Cash and Stock Dividends 77,000 shares + 7,700 shares = 84,700 84,700 shares x $0.25 = $21,175

Cash and Stock Dividends

Cash and Stock Dividends End of Exercise

Treasury Stock Transactions In-Class Exercise (Form groups and work exercise): Exercise No. Page E13-30 792 Treasury Stock Transactions (Use the format, as reflected on the next slide, to complete this exercise)

Treasury Stock Transactions General Journal Date Description Debit Credit Exercise Page E13-30 792 Treasury Stock

Treasury Stock Transactions Exercise E13-30: Stock transactions for Careful Driving School, Inc. follows: Mar. 4 Issued 22,000 shares of $1 par value common stock at $18 per share. May 22 Purchased 1,400 shares of treasury stock – common at $11 per share. Sep. 22 Sold 500 shares of treasury stock – common at $24 per share. Oct. 14 Sold 900 shares of treasury stock – common at $9 per share. Requirement: (1) Journalize the transactions.

Treasury Stock Transactions

Treasury Stock Transactions End of Exercise