Chapter 15: Question 22Q (page 810)
Distinguish among: cash dividends, property dividends, liquidating dividends, and stock dividends.
Dividends come in a variety of forms, some of which do not require monetary delivery to shareholders, such as property dividends, stock dividends, and liquidating dividends.
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
(Trading on the Equity Analysis) Presented below is information from the annual report of Emporia Plastics, Inc.
Operating income | \( 532,150 |
Bond interest expense | 135,000 |
397,150 | |
Income taxes | 183,432 |
Net income | \) 213,718 |
Bonds payable | $1,000,000 |
Common stock | 875,000 |
Retained earnings | 375,000 |
Instructions
Under IFRS, the amount of capital received in excess of par value would be credited to:
(a) Retained Earnings.
(b) Contributed Capital.
(c) Share Premium.
(d) Par value is not used under IFRS
(Entries for Stock Dividends and Stock Splits) The stockholders’ equity accounts of G.K. Chesterton Company have the following balances on December 31, 2017.
Common stock, \(10 par, 300,000 shares issued and outstanding \)3,000,000
Paid-in capital in excess of par—common stock 1,200,000
Retained earnings 5,600,000
Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $37.
Instructions
Prepare the appropriate journal entries for each of the following cases.
Pistons Inc. recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.
S.no. | Particular | Folio | Debit \( | Credit \) |
May 2 | Cash | 192,000 | ||
Capital Stock | 192,000 | |||
(Issued 12,000 shares of \(5 par value common stock at \)16 per share) | ||||
May 10 | Cash | 600,000 | ||
| Capital Stock | 600,000 | ||
(Issued 10,000 shares of \(30 par value preferred stock at \)60 per share) | ||||
May 15 | Capital Stock | 15,000 | ||
Cash | 15,000 | |||
(Purchased 1,000 shares of common stock for the treasury at \(15 per share) | ||||
May 31 | Cash | 8,500 | ||
Capital Stock | 5,000 | |||
Gain on Sale of Stock | 3,500 | |||
(Sold 500 shares of treasury stock at \)17 per share) |
Instructions
On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions.
(Equity Items on the Balance Sheet) The following are selected transactions that may affect stockholders’ equity.
Instructions
In the following table, indicate the effect each of the nine transactions has on the financial statement elements listed. Use the following code: I = Increase, D = Decrease, NE = No effect.
Item | Asset | Liabilities | Stockholders’ Equity | Paid-in Capital | Retained Earnings | Net Income |
What do you think about this solution?
We value your feedback to improve our textbook solutions.
