Question 1 Finding Amounts Missing from the Stockholders' Equity Section 2013 Shareholders' equity: Preferred stock, $100 Par 15,000
Paid-in Capital in Excess of Par - Preferred Stock 3,000
Common stock; authorized 2,000,000 shares; ? issued; 120,800 shares outstanding 826,000
Additional paid-in-capital (includes $210,000 from treasury stock transactions) 2,175,000
Retained earnings 3,152,000
Accumulated other comprehensive loss (470,000)
Treasury stock (44,400 Common stock shares in 2013), at cost (524,000)
1. The number of shares of common stock issued?
2. The par value of common stock is?
3. The average sale price of the common stock when issued was $ per share.
4. Have the treasury stock transactions increased stockholders' equity or decreased stockholders' equity? By how much?
5. How much did the treasury stock held cost per share?
6. What is the total stockholders' equity?
7. How many preferred stocks were issued?
8. What is the average price of the preferred stock issued?
9. Assume that the preferred stock was originally discounted at 10% by the market. What are the dividends that are promised by the preferred stock?
Question 2 Recording Treasury Stock Transactions and Analyzing Their Impact
a. May 25: Purchased in the market 400 shares of the company's own common stock at $35 per share. Par value for the common stock was $1 per share.
b. July 20: Sold 60 shares of treasury stock for $45 cash per share.
c. Nov 11: Sold 40 shares of treasury stock for $10 cash per share.
Required:
1. Give the journal entries for each of these transactions
2. Describe the impact, if any, that these transactions have on the income statement
Question 3 Comparing Stock Dividends and Splits On August 1, 2014, 2E Corporation had the following capital structure: Common stock (par $5) $1,400
Capital in excess of par $42,000
Retained Earnings $20,000
Treasury stock -0-
Required: Complete the following comparative tabulation based on two independent cases: Case 1: The board of directors declared and issued a 10 percent stock dividend when the stock was selling at $20 per share. Case 2: The board of directors voted a 5-to-1 stock split (i.e., a 500 percent increase in the number of shares). The market price prior to the split was $20 per share. Items Before Dividend and stock split After stock dividend After stock split
Common Stock Account
Par per share
Shares outstanding
Capital in excess of par
Retained earnings
Total stockholders' equity