Chapter 15: Question 1BE (page 811)
Buttercup Corporation issued 300 shares of
In Buttercup Corporation's book, cash is debited.
Common stock and paid-in capital in excess of par common stock are credited.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
(Dividends and Stockholders’ Equity Section) Anne Cleves Company reported the following amounts in the stockholders’ equity section of its December 31, 2016, balance sheet.
Preferred stock, 10%, \(100 par (10,000 shares authorized, 2,000 shares issued) | \)200,000 |
Common stock, \(5 par (100,000 shares authorized, 20,000 shares issued) | 100,000 |
Additional paid-in capital | 125,000 |
Retained earnings | 450,000 |
Total | \)875,000 |
During 2017, Cleves took part in the following transactions concerning stockholders’ equity.
Instructions
(Cash Dividend and Liquidating Dividend) Lotoya Davis Corporation has 10 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 80 cents per share cash dividend to stockholders of record as of June 14, payable June 3
Instructions
(Comparison of Alternative Forms of Financing) Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling \(4,200,000.
Jana Kingston Co. | |
Current liabilities | \) 300,000 |
Long-term debt, 10% | 1,200,000 |
Common stock (\(20 par) | 2,000,000 |
Retained earnings (Cash dividends, \)328,000) | 700,000 |
\(4,200,000 |
Mary Ann Benson Co. | |
Current liabilities | \) 600,000 |
Common stock (\(20 par) | 2,900,000 |
Retained earnings (Cash dividends, \)328,000) | 700,000 |
\(4,200,000 |
For the year, each company has earned the same income before interest and taxes.
Jana Kingston Co. | Mary Ann Benson Co. | |
Income before interest and taxes | \)1,200,000 | \(1,200,000 |
Interest expense | 120,000 | 0 |
1,080,000 | 1,200,000 | |
Income taxes (45% | 486,000 | 540,000 |
Net income | \) 594,000 | \( 660,000 |
At year end, the market price of Kingston’s stock was \)101 per share, and Benson’s was $63.50.
Instructions
What features or rights may alter the character of preferred stock?
What are the different bases for stock valuation when assets other than cash are received for issued shares of stock?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
