Question 1 - Greenwood Corporation has 79,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31.
Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend.
Question 2 - M. Bot Corporation has 11,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2017. No dividends were declared in 2015 or 2016. If M. Bot wants to pay $410,000 of dividends in 2017, what amount of dividends will common stockholders receive?
Question 3 - Whetzel Corporation reported net income of $160,000, declared dividends on common stock of $48,000, and had an ending balance in retained earnings of $360,000. Common stockholders' equity was $650,000 at the beginning of the year and $820,000 at the end of the year.
Compute the return on common stockholders' equity.
Question 4 - On January 1, Guillen Corporation had 95,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $7 per share. During the year, the following occurred.
Apr. 1 - Issued 26,000 additional shares of common stock for $17 per share.
June 15 - Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 - Paid the $1 cash dividend.
Dec. 1 - Issued 2,500 additional shares of common stock for $20 per share.
Dec. 15 - Declared a cash dividend on outstanding shares of $2.10 per share to stockholders of record on December 31.
(a) Prepare the entries to record these transactions.
Question 5 - On October 31, the stockholders' equity section of Heins Company consists of common stock $260,000 and retained earnings $882,000. Heins is considering the following two courses of action: (1) declaring a 4% stock dividend on the 26,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $16 per share.
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share.
Question 6 - On January 1, 2017, Geffrey Corporation had the following stockholders' equity accounts.
Common Stock ($20 par value, 66,000 shares issued and outstanding) - $1,320,000
Paid-in Capital in Excess of Par-Common Stock - 205,000
Retained Earnings - 603,000
During the year, the following transactions occurred.
Feb. 1 - Declared a $3 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 - Paid the dividend declared in February.
Apr. 1 - Announced a 2-for-1 stock split. Prior to the split, the market price per share was $40.
July 1 - Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $14 per share.
July 31 - Issued the shares for the stock dividend.
Dec. 1 - Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2018.
Dec. 31 - Determined that net income for the year was $340,000.
Journalize the transactions and the closing entries for net income and dividends.
Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.)
Prepare a stockholders' equity section at December 31.
Question 7 - The stockholders' equity accounts of Karp Company at January 1, 2017, are as follows.
Preferred Stock, 6%, $50 par $590,000
Common Stock, $3 par 471,000
Paid-in Capital in Excess of Par-Preferred Stock 185,000
Paid-in Capital in Excess of Par-Common Stock 296,000
Retained Earnings 761,000
There were no dividends in arrears on preferred stock. During 2017, the company had the following transactions and events.
July 1 - Declared a $0.90 cash dividend per share on common stock.
Aug. 1 - Discovered $28,000 understatement of depreciation expense in 2016. (Ignore income taxes.)
Sept. 1 - Paid the cash dividend declared on July 1.
Dec. 1 - Declared a 15% stock dividend on common stock when the market price of the stock was $20 per share.
Dec. 15 - Declared a 6% cash dividend on preferred stock payable January 15, 2018.
Dec. 31 - Determined that net income for the year was $362,000.
Dec. 31 - Recognized a $219,000 restriction of retained earnings for plant expansion.
Journalize the transactions, events, and closing entries for net income and dividends.
Enter the beginning balances in the accounts, and post to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.)
Prepare a retained earnings statement for the year.
Prepare a stockholders' equity section at December 31, 2017.
Question 8 - The post-closing trial balance of Storey Corporation at December 31, 2017, contains the following stockholders' equity accounts.
Preferred Stock (14,600 shares issued) $730,000
Common Stock (243,000 shares issued) 2,430,000
Paid-in Capital in Excess of Par-Preferred Stock 243,000
Paid-in Capital in Excess of Par-Common Stock 418,000
Common Stock Dividends Distributable 243,000
Retained Earnings 985,220
A review of the accounting records reveals the following.
1. No errors have been made in recording 2017 transactions or in preparing the closing entry for net income.
2. Preferred stock is $50 par, 6%, and cumulative; 14,600 shares have been outstanding since January 1, 2016.
3. Authorized stock is 19,600 shares of preferred, 486,000 shares of common with a $10 par value.
4. The January 1 balance in Retained Earnings was $1,130,000.
5. On July 1, 20,200 shares of common stock were issued for cash at $16 per share.
6. On September 1, the company discovered an understatement error of $91,400 in computing salaries and wages expense in 2016. The net of tax effect of $63,980 was properly debited directly to Retained Earnings.
7. A cash dividend of $243,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2016.
8. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $16.
9. Net income for the year was $551,000.
10. On December 31, 2017, the directors authorized disclosure of a $201,000 restriction of retained earnings for plant expansion. (Use Note X.)
Reproduce the Retained Earnings account for 2017.
Prepare a retained earnings statement for 2017.
Prepare a stockholders' equity section at December 31, 2017.
Compute the allocation of the cash dividend to preferred and common stock.
Question 9 - On January 1, 2017, Ven Corporation had the following stockholders' equity accounts.
Common Stock (no par value, 94,200 shares issued and outstanding) $1,365,000
Retained Earnings 530,000
During the year, the following transactions occurred.
Feb. 1 - Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 - Paid the dividend declared in February.
Apr. 1 - Announced a 3-for-1 stock split. Prior to the split, the market price per share was $37.
July 1 - Declared a 6% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $12 per share.
July 31 - Issued the shares for the stock dividend.
Dec. 1 - Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2018.
Dec. 31 - Determined that net income for the year was $310,000.
(a) Prepare the stockholders' equity section of the balance sheet at March 31.
(b) Prepare the stockholders' equity section of the balance sheet at June 30.
(c) Prepare the stockholders' equity section of the balance sheet at September 30.
(d) Prepare the stockholders' equity section of the balance sheet at December 31, 2017.