Chapter 13: Q11RQ (page 707)
Where and how is treasury stock reported on the balance sheet?
Recording treasury stock under the cost method, the cost of treasury stock is recorded at the end of the section Stockholders' Equity of the balance sheet. Treasury stock will be reduced from the value in Stockholders' Equity.
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Sjostrom, Inc. had beginning retained earnings of \(300,000 on January 1, 2018. During the year, Sjostrom declared and paid \)140,000 of cash dividends and earned $200,000 of net income. Prepare a statement of retained earnings for Sjostrom, Inc. for the year ended December 31, 2018.
Computing dividends on preferred and common stock and journalizing
The following elements of stockholders’ equity are from the balance sheet of Sneed Marketing Corp. at December 31, 2017:
800,000
Preferred Stock—4%, \(2 Par Value; 80,000 shares
authorized, 55,000 shares issued and outstanding
Paid-In Capital:
\) 110,000
Stockholders’ Equity
Common Stock—\(0.10 Par Value; 8,750,000 shares
authorized, 8,000,000 shares issued and outstanding
Sneed paid no preferred dividends in 2017.
Requirements
1. Compute the dividends to the preferred and common shareholders for 2018 if total dividends are \)185,000 and assuming the preferred stock is noncumulative. Assume no changes in preferred and common stock in 2018.
Question: Journalizing a large stock dividend
Nelly, Inc. had 320,000 shares of \(2 par value common stock issued and outstanding as of December 15, 2018. The company is authorized to issue 1,300,000 common shares. On December 15, 2018, Nelly declared a 40% stock dividend when the market value for Nelly’s common stock was \)7 per share. The stock was issued on Dec. 30.
Requirements
1. Journalize the declaration and distribution of the stock dividend.
Journalizing issuance of stock and preparing the stockholders’ equity section of the balance sheet
The charter for ASAP-TV, Inc. authorizes the company to issue 100,000 shares of \(5, no-par preferred stock and 500,000 shares of common stock with \)1 par value. During its start-up phase, ASAP-TV completed the following transactions:
Sep. 6 Issued 550 shares of common stock to the promoters who organized the corporation, receiving cash of \(16,500.
12 Issued 400 shares of preferred stock for cash of \)23,000.
14 Issued 1,500 shares of common stock in exchange for land with a market value of $17,000.
Requirements
1. Record the transactions in the general journal.
Eates Corp. issued 8,000 shares of no-par common stock for \(13 per share.
Requirements
1. Record issuance of the stock if the stock:
a. is true no-par stock.
b. has stated value of \)3 per share.
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