homework
Chapter 15
E15.1 (LO 1) Excel (Recording the Issuances of Common Stock) During its first year of oper- ations, Collin Raye Corporation had the following transactions pertaining to its common stock.
Jan. 10 Mar. 1
July 1 Sept. 1
Instructions
a. Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.
b. Prepare the journal entries for these transactions, assuming that the common stock is no-par with a stated value of $3 per share.
E15.3 (LO 1, 2) (Stock Issued for Land) Twenty-five thousand shares reacquired by Elixir Corpo- ration for $53 per share were exchanged for undeveloped land that has an appraised value of $1,700,000. At the time of the exchange, the common stock was trading at $62 per share on an organized exchange.
Instructions
· Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method.
· Briefly identify the possible alternatives (including those that are totally unacceptable) for quantify- ing the cost of the land and briefly support your choice.
E15.5 (LO 1) (Lump-Sum Sales of Stock with Preferred Stock) Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000.
Instructions
· Prepare the journal entry for the issuance when the market price of the common shares is $165 each and market price of the preferred is $230 each. (Round to nearest dollar.)
· Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $170 per share.
E15.7 (LO 2) (Effect of Treasury Stock Transactions on Financials) Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions.
1. Purchased 5,000 treasury shares at $45 per share.
2. Resold 2,000 of the treasury shares at $49 per share. 3. Resold 500 of the treasury shares at $40 per share.
Instructions
Use the following code to indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method (I = Increase; D = Decrease; NE = No effect).
E15.10 (LO 2, 4) (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 at December 31 (in millions).
192,000
600,000
15,000
15,000
5,000 3,500
Additional paid-in capital Common stock
Retained earnings Treasury stock
Total stockholders’ equity
Common stock shares issued Common stock shares authorized Treasury stock shares
2020 2019
$ 931 $ 817 545 540 7,167 5,226 1,564 918
$7,079 $5,665
218 216 500 500 34 27
Instructions
a. Answer the following questions.
1. What is the par value of the common stock?
2. What is the cost per share of treasury stock at December 31, 2020, and at December 31, 2019?
b. Prepare the stockholders’ equity section at December 31, 2020.
E15.13 (LO 3) (Stock Split and Stock Dividend) The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share vol- ume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding.
Instructions
Prepare the necessary journal entries assuming the following. a. The board votes a 2-for-1 stock split.
b. The board votes a 100% stock dividend.
c. Briefly discuss the accounting and securities market differences between these two methods of in-
creasing the number of shares outstanding.
E15.15 (LO 3) Excel (Dividend Entries) The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2019.
Current assets
Debt investments (trading) Common stock (par value $10) Paid-in capital in excess of par Retained earnings
$540,000 624,000 500,000 150,000 840,000
Prepare the required journal entries for the following unrelated items.
· A 5% stock dividend is declared and distributed at a time when the market price per share is $39.
· The par value of the common stock is reduced to $2 with a 5-for-1 stock split.
· A dividend is declared January 5, 2020, and paid January 25, 2020, in bonds held as an investment. The bonds have a book value of $100,000 and a fair value of $135,000.
E15.17 (LO 4) (Stockholders’ Equity Section) Bruno Corporation’s post-closing trial balance at December 31, 2020, is shown as follows.
Bruno Corporation Post-Closing Trial Balance December 31, 2020
Accounts payable
Accounts receivable
Accumulated depreciation—buildings Additional paid-in capital in excess
of par—common From treasury stock
Dr. 480,000
Cr. 310,000
185,000
1,300,000 160,000
$
$
Cr.
30,000 300,000
200,000 4,000
500,000 301,000
Totals
At December 31, 2020, Bruno had the following number of common and preferred shares.
Dr.
170,000 $3,290,000
$3,290,000
Exercises 15-41
Allowance for doubtful accounts Bonds payable
Buildings
Cash
Common stock ($1 par)
Dividends payable (preferred stock—cash) Inventory
Land
Preferred stock ($50 par)
Prepaid expenses
Retained earnings
Treasury stock (common at cost)
1,450,000 190,000
560,000 400,000
40,000
Preferred
60,000 10,000 10,000
Authorized Issued Outstanding
Common
600,000 200,000 190,000
The dividends on preferred stock are $4 cumulative. In addition, the preferred stock has a preference in liquidation of $50 per share.
Instructions
Prepare the stockholders’ equity section of Bruno’s balance sheet at December 31, 2020.
(AICPA adapted)