Chapter 15: Question 7IFRS (page 825)
Kaymer Corporation issued 300 shares of \(10 par value ordinary shares for \)4,500. Prepare Kaymer’s journal entry.
The total value of share capital – ordinary is $3,000.
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(Analysis of Equity Data and Equity Section Preparation) For a recent 2-year period, the balance sheet of Santana Dotson Company showed the following stockholders’ equity data on December 31 (in millions).
2017 | 2016 | |
Additional paid-in capital | \( 931 | \) 817 |
Common stock | 545 | 540 |
Retained earnings | 7,167 | 5,226 |
Treasury stock | 1,564 | 918 |
Total stockholders’ equity | \(7,079 | \)5,665 |
Common stock shares issued | 218 | 216 |
Common stock shares authorized | 500 | 500 |
Treasury stock shares | 34 | 27 |
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
Teller Corporation’s post-closing trial balance at December 31, 2017, was as follows.
TELLER CORPORATION POST-CLOSING TRIAL BALANCE DECEMBER 31, 2017 | ||
Dr. | Cr. | |
Accounts payable | \( 310,000 | |
Accounts receivable | \) 480,000 | |
Accumulated depreciation—building and equipment | 185,000 | |
Allowance for doubtful accounts | 30,000 | |
Bonds payable | 700,000 | |
Building and equipment | 1,450,000 | |
Cash | 190,000 | |
Dividends payable on preference shares—cash | 4,000 | |
Inventories | 560,000 | |
Land | 400,000 | |
Prepaid expenses | 40,000 | |
Retained earnings | 201,000 | |
Share capital—ordinary (\(1 par value) | 200,000 | |
Share capital—preference (\)50 par value) | 500,000 | |
Share premium—ordinary | 1,000,000 | |
Share premium—treasury | 160,000 | |
Treasury shares—ordinary at cost | 170,000 |
|
Totals | \(3,290,000 | \)3,290,000 |
On December 31, 2017, Teller had the following number of ordinary and preference shares.
Ordinary | Preference | |
Authorized | 600,000 | 60,000 |
Issued | 200,000 | 10,000 |
Outstanding | 190,000 | 10,000 |
The dividends on preference shares are \(4 cumulative. In addition, the preference shares have a preference in the liquidation of \)50 per share.
Instructions
Prepare the equity section of Teller’s statement of financial position at December 31, 2017.
Use the information from BE15-13, but assume Green Day Corporation declared a 100% stock dividend rather than a 5% stock dividend. Prepare the journal entries for both the date of declaration and the date of distribution.
What are the principal considerations of a board of directors in making decisions involving dividend declarations? Discuss briefly.
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