EXERCISES

Ex. 121

Class1st Year2nd Year3rd Year4th Year5th Year

Preferred$1.50$2.00$2.00$2.00

Common0.2010.6420.803

1$50,000 250,000

2$160,000 250,000

3$200,000 250,000

Ex. 122

Class1st Year2nd Year3rd Year4th Year5th Year

Preferred$0.50$4.00*$1.50$1.50

Common.803.301.20

TotalDividends per Share

*Third-year dividends:Dividends

Preferred

Arrears dividend, preferred

$25,000$2.50

Current dividend, preferred

15,000

1.50

Total

$40,000 $4.00 Ex. 123

a.Mar.10Cash

900,000

Common Stock

600,000

Paid-In Capital in Excess of Par

Common Stock

300,000

Aug.9Cash

525,000

Preferred Stock

500,000

Paid-In Capital in Excess of Par

Preferred Stock

25,000

b.$1,425,000 ($900,000 + $525,000)

Ex. 124

a.Nov.2Cash

375,000

Common Stock

125,000

Paid-In Capital in Excess of

Stated Value

250,000

Dec.3Cash

65,000

Preferred Stock

50,000

Paid-In Capital in Excess of Par

Preferred Stock

15,000

b.$440,000 ($375,000 + $65,000)

Ex. 125

Feb.27Land

292,000

Common Stock

40,000

Paid-In Capital in Excess of Par

252,000

Ex. 126

a.Cash

20,000

Common Stock

20,000

b.Organization Costs

1,000

Common Stock

1,000

Cash

19,000

Common Stock

19,000

c.Land

45,000

Building

150,000

Interest Payable*

1,000

Mortgage Note Payable

125,000

Common Stock

69,000

*An acceptable alternative would be to credit Interest Expense.

Ex. 127

Buildings

95,000

Land

40,000

Preferred Stock

100,000

Paid-In Capital in Excess of Par

Preferred Stock

35,000

Cash

565,000

Common Stock

450,000

Paid-In Capital in Excess of Par

Common Stock

115,000

Ex. 128

Jan.6Cash

250,000

Common Stock

250,000

11Organization Costs

1,500

Common Stock

1,500

Feb.28Land

20,000

Buildings

100,000

Equipment

18,000

Common Stock

115,000

Paid-In Capital in Excess of Par

Common Stock

23,000

Mar.15Cash

510,000

Preferred Stock

500,000

Paid-In Capital in Excess of Par

Preferred Stock

10,000

Ex. 129

a.Mar.1Treasury Stock

220,000

Cash

220,000

July8Cash

150,500

Treasury Stock

140,000

Paid-In Capital from Sale of

Treasury Stock

10,500

Dec.19Cash

78,000

Paid-In Capital from Sale of

Treasury Stock

2,000

Treasury Stock

80,000

b.$8,500 credit

c.Stockholders' Equity section

d.Chico Springs may have purchased the stock to support the market price of the stock, to provide shares for resale to employees, or for reissuance to employees as a bonus according to stock purchase agreements.

Ex. 1210

a.Sept.6Treasury Stock

540,000

Cash

540,000

Nov.15Cash

186,000

Treasury Stock

180,000

Paid-In Capital from Sale

of Treasury Stock

6,000

Dec.21Cash

273,000

Treasury Stock

270,000

Paid-In Capital from Sale

of Treasury Stock

3,000

b.

$9,000 credit

c.$90,000 debit

d.The balance in the treasury stock account is reported as a deduction from the total of the paid-in capital and retained earnings.

Ex. 1211

a.July1Treasury Stock

120,000

Cash

120,000

Aug.10Cash

64,500

Treasury Stock

60,000

Paid-In Capital from Sale of

Treasury Stock

4,500

Dec.19Cash

58,500

Paid-In Capital from Sale of

Treasury Stock

1,500

Treasury Stock

60,000

b.$3,000 credit

c.Stockholders Equity section

d.Heavenly Inc. may have purchased the stock to support the market price of the stock, to provide shares for resale to employees, or for reissuance to employees as a bonus according to stock purchase agreements.

Ex. 1212

a.90,000 shares (30,000 3)

b.$40 per share ($120 3)

Ex. 1213

Stockholders

AssetsLiabilitiesEquity(1)Declaring a stock dividend000

(2)Issuing stock certificates for

the stock dividend declared

in (1)000

(3)Declaring a cash dividend0+

(4)Paying the cash dividend

declared in (3)0

(5)Authorizing and issuing stock

certificates in a stock split000

Ex. 1214

Jan.4Cash Dividends

75,000

Cash Dividends Payable

75,000

Feb.3No entry required.

Mar.5Cash Dividends Payable

75,000

Cash

75,000

Ex. 1215

a.(1)Stock Dividends

4,560

Stock Dividends Distributable

3,000

Paid-In Capital in Excess of Par

Common Stock

1,560

(2)Stock Dividends Distributable

3,000

Common Stock

3,000

b.(1)$362,500

(2)$471,000

(3)$833,500

c.(1)$367,060

(2)$466,440

(3)$833,500

Ex. 1216

Jan.7No entry required. The stockholders ledger would be revised to record the increased number of shares held by each stockholder.

Mar.1Cash Dividends

36,000*

Cash Dividends Payable

36,000

* [(8,000 shares $2) + (200,000 shares

$0.10)]

Apr.15Cash Dividends Payable

36,000

Cash

36,000

Nov.1Cash Dividends

66,000*

Cash Dividends Payable

66,000

* [(8,000 shares $2) + (200,000 shares

$0.25)]

1Stock Dividends

60,000**

Stock Dividends Distributable

50,000

Paid-In Capital in Excess of

ParCommon Stock

10,000

** (200,000 shares 1% $30)

Dec.15Cash Dividends Payable

66,000

Cash

66,000

15Stock Dividends Distributable

50,000

Common Stock

50,000

Ex. 1217

a.Cisco Systems, Inc., paid no dividends in 2000 and 1999. In its annual report, Cisco Systems states that it has never paid cash dividends and has no present plans to do so.

b. Investors are apparently attracted to Cisco Systems, Inc., because their main objective is a rapid increase in the market price of the stock.

Ex. 1218

a.2.1% ($1.00 $47.44)

b.Hersheys dividend yield is relatively low. Thus, it is likely that most stockholders are looking for an increase in market price rather than current dividends.

PROBLEMS

Prob. 121A

1.

Preferred Dividends

Common Dividends

Total

YearDividendsTotalPer ShareTotalPer Share

1999

$32,000$32,000$1.28$0$0

2000

65,00065,0002.6000

2001

84,00053,000*2.1231,0000.62

2002

60,00050,0002.0010,0000.20

2003

72,00050,0002.0022,0000.44

2004

95,00050,000

2.0045,000

0.90

$12.00

$2.16

Preferred

Dividends

*Arrears dividend, preferred

$3,000

Current dividend, preferred

50,000

Total

$53,0002.Average annual dividend for preferred: $2 per share ($12 6)

Average annual dividend for common: $0.36 per share ($2.16 6)

3.a.2% ($2 $100)

b. 4.5% ($0.36 $8)

Prob. 122A

Mar.7Building

375,000

Land

75,000

Common Stock

400,000

Paid-In Capital in Excess of Par

Common Stock

50,000

21Cash

625,000

Preferred Stock

500,000

Paid-In Capital in Excess of Par

Preferred Stock

125,000

29Cash

200,000

Mortgage Note Payable

200,000

Prob. 122AConcluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that accompanies this text is used.

OSAKA CORP.

Balance Sheet

March 31, 20

Assets

Cash

$1,200,000

Accounts receivable

426,325

Merchandise inventory

584,550

Prepaid insurance

75,225

Supplies

101,945

Total current assets

$2,388,045

Land

$75,000

Building

375,000

Total plant assets

450,000Total assets

$2,838,045Liabilities

Accounts payable

$357,500

Cash dividends payable

86,840

Total current liabilities

$444,340

Mortgage note payable

200,000Total liabilities

$644,340

Stockholders Equity

Paid-in capital:

Preferred stock

$500,000

Excess of issue price over parPS

125,000

Common stock

400,000

Excess of issue price over parCS

50,000

Donated capital

200,000

From sale of treasury stock

35,000

Total paid-in capital

$1,310,000

Retained earnings

999,705

Total

$2,309,705

Deduct treasury stock

116,000Total stockholders equity

2,193,705Total liabilities and stockholders equity

$2,838,045Prob. 123A

a.Cash

200,000

Common Stock

100,000

Paid-In Capital in Excess of ParCommon

Stock

100,000

b.Cash

90,000

Preferred Stock

75,000

Paid-In Capital in Excess of ParPreferred

Stock

15,000

c.Treasury Stock

105,000

Cash

105,000

d.Cash

75,000

Treasury Stock

63,000

Paid-In Capital from Sale of Treasury Stock

12,000

e.Cash

20,000

Paid-In Capital from Sale of Treasury Stock

1,000

Treasury Stock

21,000

f.Cash Dividends

37,500

Cash Dividends Payable

37,500

[(8,000 $2.25) + (39,000 $0.50)]

g.Cash Dividends Payable

37,500

Cash

37,500

Prob. 123AConcluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that accompanies the text is used.

CYMA ENVIRONMENTAL CORP.

Balance Sheet

June 30, 2004

Assets

Cash

$392,800

Accounts receivable

602,200

Merchandise inventory

809,300

Prepaid insurance

46,400

Supplies

85,000

Equipment

$1,132,900

Less accumulated depreciation

69,000

1,063,900

Total assets

$2,999,600Liabilities

Accounts payable

$835,100

Stockholders Equity

Paid-in capital:

Preferred stock

$600,000

Excess of issue price over parPS

75,000

Common stock

400,000

Excess of issue price over parCS

200,000

From sale of treasury stock

11,000

Total paid-in capital

$1,286,000

Retained earnings

899,500

Total

$2,185,500

Deduct treasury stock

21,000Total stockholders equity

2,164,500Total liabilities and stockholders equity

$2,999,600Prob. 124A

1. and 2.

Common Stock

Jan.1Bal.1,600,000

Feb.19

200,000

Aug.11

90,000

1,890,000

Paid-In Capital in Excess of Stated Value

Jan.1Bal.300,000

Feb.19

150,000

July1

99,000

549,000

Retained Earnings

Dec.31

267,300Jan.1Bal.625,000

Dec.31

369,400

727,100

994,400

Treasury Stock

Jan.1Bal.120,000Apr.1

120,000

Oct.20

285,000

285,000

405,000

Paid-In Capital from Sale of Treasury Stock

Apr.1

20,000

Donated Capital

Jan.10

100,000

Stock Dividends Distributable

Aug.11

90,000July1

90,000

Stock Dividends

July1

189,000Dec.31

189,000

Cash Dividends

Dec.27

78,300Dec.31

78,300

Prob. 124AContinued

2.

Jan.10Land

100,000

Donated Capital

100,000

30Cash Dividends Payable

76,000

Cash

76,000

Feb.19Cash

350,000

Common Stock

200,000

Paid-In Capital in Excess of Stated Value

150,000

Apr.1Cash

140,000

Treasury Stock

120,000

Paid-In Capital from Sale of Treasury Stock

20,000

July1Stock Dividends

189,000*

Stock Dividends Distributable

90,000

Paid-In Capital in Excess of Stated Value

99,000

*(80,000 + 10,000) 5% $42

Aug.11Stock Dividends Distributable

90,000

Common Stock

90,000

Oct.20Treasury Stock

285,000

Cash

285,000

Dec.27Cash Dividends

78,300**

Cash Dividends Payable

78,300

**(80,000 + 10,000 + 4,500 7,500) $0.90

31Income Summary

369,400

Retained Earnings

369,400

31Retained Earnings

267,300

Stock Dividends

189,000

Cash Dividends

78,300

3.$3,001,100 ($1,890,000 + $549,000 + $727,100 $285,000 + $20,000 + $100,000)

Prob. 124AConcluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that accompanies the text is used.

SASQUATCH ENTERPRISES INC.

Balance Sheet

December 31, 20

Assets

Cash

$307,223

Accounts receivable

385,900

Merchandise inventory

1,109,800

Prepaid insurance

72,260

Supplies

90,900

Land

736,400

Equipment

$668,717

Less accumulated depreciation

98,500

570,217

Total assets

$3,272,700Liabilities

Accounts payable

$221,800

Cash dividends payable

49,800Total liabilities

$271,600

Stockholders Equity

Paid-in capital:

Common stock

$1,890,000

Excess of issue price over stated value

549,000

Donated capital

100,000

From sale of treasury stock

20,000

Total paid-in capital

$2,559,000

Retained earnings

727,100

Total

$3,286,100

Deduct treasury stock

285,000Total stockholders equity

3,001,100Total liabilities and stockholders equity

$3,272,700Prob. 125A

Jan.6No entry required. The stockholders ledger would be revised to record the increased number of shares held by each stockholder.

Mar.13Treasury Stock

262,500

Cash

262,500

May1Cash Dividends

121,500*

Cash Dividends Payable

121,500

*(18,000 $2) + [(150,000 7,500) $0.60]

June1Cash Dividends Payable

121,500

Cash

121,500

Sept.17Cash

100,000

Treasury Stock

87,500

Paid-In Capital from Sale of Treasury

Stock

12,500

Nov.2Cash Dividends

123,000*

Cash Dividends Payable

123,000

*(18,000 $2) + [(150,000 5,000) $0.60]

2Stock Dividends

110,200**

Stock Dividends Distributable

72,500

Paid-In Capital in Excess of ParCommon

Stock

37,700

**(150,000 5,000) 2% $38

Dec.3Cash Dividends Payable

123,000

Cash

123,000

3Stock Dividends Distributable

72,500

Common Stock

72,500

Prob. 125AConcluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that accompanies the text is used.

SILVER GATE BOATING SUPPLY CORPORATION

Balance Sheet

December 31, 20

Assets

Cash

$96,209

Accounts receivable

174,564

Merchandise inventory

561,812

Prepaid insurance

65,235

Office supplies

73,601

Land

447,221

Equipment

$492,850

Less accumulated depreciation

152,623

340,227

Total assets

$1,758,869Liabilities

Accounts payable

$249,310

Stockholders Equity

Paid-in capital:

Common stock

$1,042,500

Excess of issue price over par

302,400

From sale of treasury stock

12,500

Total paid-in capital

$1,357,400

Retained earnings

437,159

Total

$1,794,559

Deduct treasury stock

285,000Total stockholders equity

1,509,559Total liabilities and stockholders equity

$1,758,869