ACC 291 Week 4 Wiley Work Latest 2016 Version

ACC 291 Week 4 Wiley  Work

Do it Review    11-1

Indicate whether each of the following statements is true or false

1.     The corporation  is an entity separate and distinct from its owners

2.     The liability of  stockholders is normally limited to their investment in the corporation

3.     The relative lack of government regulation is an advantage of the corporate form of business.

4.     There is no journal entry to record the authorization of capital stock.

5.     Nor par value stock is quite rare today.

Exercise 11-5

Garcia Corporation 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.

May 2 Cash 109,200

Capital Stock 109,200

(Issued 7,800 shares of $12 par value common stock at $14 per

share)

10 Cash 595,650

Capital Stock 595,650

(Issued 10,450 shares of $17 par value preferred stock at $57 per

share)

15 Capital Stock 8,320

Cash 8,320

*Broadening Your perspective    11-1

*Broadening Your Perspective    11-2

*Exercise 11-7

On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of

common stock $395,600 and retained earnings $449,100.

Pele is considering the following two courses of action:

(1) Declaring a 6% stock dividend on the 98,900 $4 par value shares outstanding

(2) Effecting a 2for1

stock split that will reduce par value to $2 per share.

The current market price is $15 per share.

Prepare a tabular summary of the effects of the alternative actions on the company’s

stockholders’ equity and outstanding shares.

Pele Company’s

*Problem 11-5A

Pringle Corporation has been authorized to issue 23,500 shares of $100 par value, 7%,

noncumulative preferred stock and 1,026,900 shares of nopar

common stock.

The corporation assigned a $5 stated value to the common stock. At December 31, 2014, the

ledger contained the following balances pertaining to stockholders’ equity.

Preferred Stock $161,200

Paidin

Capital in Excess of Par Value—Preferred Stock 22,110

Common Stock 2,280,000

Paidin

Capital in Excess of Stated Value—Common Stock 1,509,000

Treasury Stock— (5,840 common shares) 75,920

Retained Earnings 81,200

The preferred stock was issued for $183,310 cash. All common stock issued was for cash. In

November 5,840 shares of common stock were purchased for the treasury at a per share cost of

$13. No dividends were declared in 2014.

Prepare the journal entries for the following. (Credit account titles are automatically

indented when amount is entered. Do not indent manually.)

(1) Issuance of preferred stock for cash.

(2) Issuance of common stock for cash.

(3) Purchase of common treasury stock for cash.

*Problem 11-8A

On January 1, 2014, Everett Corporation had these stockholders’ equity accounts.

Common Stock ($10 par value, 68,200 shares issued and outstanding) $682,000

Paidin

Capital in Excess of Par Value 501,500

Retained Earnings 606,600

During the year, the following transactions occurred.

Jan. 15 Declared a $0.50 cash dividend per share to stockholders of record on January 31, payable

February 15.

Feb. 15 Paid the dividend declared in January.

Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15.

On April 15, the market price of the stock was $15 per share.

May 15 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15,

payable January 10, 2015.

Dec. 31 Determined that net income for the year was $441,700.

Journalize the transactions. (Record entries in the order displayed in the problem statement.

Credit account titles are automatically indented when amount is entered. Do not indent

manually.)

Date Account Titles and

Explanation Debit Credit