Chapter 11: Q1DQ (page 515)
What are organization expenses? Provide examples.
The organization expenses are those expenses that are directly related to the formation of a corporation, limited liability company, or partnership.
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Unilever Group reports the following equity information for the years ended December 31, 2015 and 2014
(euros in millions).
December 31 | 2015 | 2014 |
Share capital | € 484 | € 484 |
Share premium | 152 | 145 |
Other reserves | (7,816) | (7,538) |
Retained profit | 22,619 | 20,560 |
Shareholders’ equity | € 15,439 | € 13,651 |
1. Match each of the three account titles—Share capital, Share premium, and Retained profit—with the usual account title applied under U.S. GAAP from the following options:
a. Paid-in capital in excess of par value, common stock
b. Retained earnings
c. Common stock, par value
2. Prepare Unilever’s journal entry, using its account titles, to record the issuance of capital stock assuming that its entire par value stock was issued on December 31, 2014, for cash.
3. What were Unilever’s 2015 dividends assuming that only dividends and income impacted retained profit for 2015 and that its 2015 income totaled €5,259?
Question:
Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.
Account and explanation | Debit | Credit | |
A | Cash Common Stock, \(25 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 300,000 | 250,000 50,000 |
B | Organization Expenses Common Stock, \)25 Par Value Paid-In Capital in Excess of Par Value, Common Stock. | 150,000 | 125,000 25,000 |
C | Cash Accounts Receivable Building Notes Payable Common Stock, \(25 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 43,000 15,000 81,500 | 59,500 50,000 30,000 |
D | Cash Common Stock, \)25 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 120,000 | 75,000 45,000 |
Required
1. Explain the transaction(s) underlying each journal entry (a) through (d).
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $695,000?
Use the data in Exercise 11-8 to determine the number of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also, determine the total dividends paid to each class for the four years combined.
Use the following comparative figures for Apple and Google.
Key figures | Apple | |
Net income (in millions) | \(53,394 | \)16,348 |
Cash dividends declared per common share | \(1.98 | - |
Common shares outstanding (in millions) | 5,578.753 | 687.348 |
Weighted-average common shares outstanding (in millions) | 5,753.421 | 684.626 |
Market value (price) per share | \)107.00 | \(775.10 |
Equity applicable to common shares (in millions) | \)119,355 | $120,331 |
Required
Question:
Weiss Company is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.
Account and explanation | Debit | Credit | |
A | Cash Common Stock, \(1 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 120,000 | 3,000 117,00 |
B | Organization Expenses Common Stock, \)1 Par Value Paid-In Capital in Excess of Par Value, Common Stock. | 40,000 | 1,000 39,000 |
C | Cash Accounts Receivable Building Notes Payable Common Stock, \(1 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 13,300 8,000 37,000 | 18,300 800 39,200 |
D | Cash Common Stock, \)1 Par Value Paid-In Capital in Excess of Par Value, Common Stock | 60,000 | 1,200 58,800 |
Required
1. Explain the transaction(s) underlying each journal entry (a) through (d).
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $ 283,000?
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