1. Common Stock, $1 Par, 1,500,000 Authorized; 200,000 Issued and Outstanding$200,000
1. Common Stock, $1 par, 1,500,000 authorized; 200,000 issued and outstanding$200,000
Additional paid in capital, common stock$3,800,000
Retained earnings$300,000
Treasury StockNone
Case 1: The board of directors declared and issued a 10 percent stock dividend when the stock was selling at $10 per share.Case 2: The board of directors declared and issued a 100 percent stock dividend when the stock was selling at $10 per share.
Case 3: The board of directors voted a 2-for-1 stock split. The market price prior to the split was $10 per share.
Case 1 / Case 2 / Case 3
Items / Before Stock Transactions / After 10% Stock
Dividend / After 100% Stock Dividend / After Stock Split
Number of shares outstanding / / / /
Par per share / $ / 1 / $ / / $ / / $ /
Common stock account / $ / / $ / / $ / / $ /
Additional paid-in capital / 3,800,000 / / /
Retained earnings / 300,000 / / /
Total stockholders' equity / $ / / $ / / $ / / $ /
2. December 31, 2007
Common stock (par $1; outstanding, 200,000 shares) / $ / 200,000Preferred stock, 7% (par $10; outstanding, 25,000 shares) / 250,000
Retained earnings / 890,000
The board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were declared during 2005 or 2006.
Case A: / The preferred stock is noncumulative; the total amount of dividends is $64,000.
Case B: / The preferred stock is cumulative; the total amount of dividends is $64,000. Dividends were not in arrears prior to 2005.
a. Compute the amount of dividends, in total, payable to each class of stockholders for each case.
Case A / Case BPreferred / $ / / $ /
Common / /
Total / $ / / $ /
b. Compute the amount of per share, payable to each class of stockholders for each case.
Case A / Case BPreferred / $ / / $ /
Common / $ / / $ /
3. A company purchased 2,000 shares of its $.02 par value common stock for $42 per share on Dec. 1, 2012. On Mar. 31, 2013, the company sold 500 of the shares for $43 per share. How did the Mar. 31, 2013 sale affect the company’s financial statements?
A) Cash + $21,500
Treasury Stock - $21,500.
B) Cash + $21,500
Treasury Stock - $21,000
Gain on Sale of Treasury Stock + $500.
C) Cash + $21,500
Common Stock + $10
Additional Paid-in Capital + $21,490.
D) Cash + $21,500
Treasury Stock - $21,000
Additional Paid-in Capital + $500.
4. A company issued 100,000 shares of $0.25 par value common stock for $36.00 per share. How did this transaction affect the accounting equation?
A) Cash + $3,600,000
Common Stock + $25,000
Additional Paid-in Capital + $3,575,000.
B) Cash + $3,600,000
Common Stock Revenue + $3,600,000.
C) Cash + $3,600,000
Retained Earnings + $3,600,000.
D) Cash + $3,600,000
Common Stock + $25,000
Gain on Sale of Common Stock + $3,575,000.
5. Madison Motors, Inc., had the following shares outstanding during 2005:
(a) Preferred stock, 6%, $50 par value, cumulative, 1,000 shares with dividends in arrears for 2003 and 2004.
(b) Common stock, $100 par value, 2,000 shares.
The total dividends declared for the current year were $21,000. The total amount of dividends to which the preferred stockholders are entitled is
a.$ 3,000.
b.$ 6,000.
c.$ 9,000
d.$12,000.
6). A company sells 1 million shares of common stock with a par value of $0.02 for $15 a share. To record the transaction, the company would:
A. / Increase Cash for $20,000 and increase Common Stock for $20,000.B. / Increase Cash for $15 million and increase Common Stock for $15 million.
C. / Increase Cash for $15 million, increase Common Stock for $20,000 and increase
additional paid-in Capital for $14,980,000.
D. / Increase Cash for $20,000, increase Capital Receivable for $14,980,000, increase
Common Stock for $20,000 and increase additional paid-in capital for $14,980,000.