Stockholders’ Equity
Chapter 13
Exercises
Issuing Stock
• In-Class Exercise (Form groups and work exercise):
Exercise
E13- 22
Page
788
Stock Issue Transactions
(Use the format, as reflected on the next slide, to
complete this exercise)
Issuing Stock
General Journal
Date
Description
Exercise
E13- 22
Page
788
Debit
Credit
Issuing Stock at Par and No-Par
Issuing Stock
Exercise E13-22:
The charter of Evergreen Capital Corporation authorizes the issuance
of 900 shares of preferred stock and 1,250 shares of common stock.
During a two-month period, Evergreen completed these stock
issuance transactions:
Mar. 23 Issues 230 shares of $4 par value common stock for cash of
$5 per share.
Apr. 12 Received inventory with a market value of $23,000 and
equipment with a market value of $20,000 for 320 shares of
the $4 par value common stock.
17 Issued 900 shares of 5%, $20 par value preferred stock for
$20 per share.
Requirements:
(1) Record the transactions in the general journal.
(2) Prepare the stockholders’ equity section of the Evergreen balance
sheet as of April 30, 2014. Retained Earnings balance is $79,000.
Issuing Stock
Issuing Stock
Issuing Stock
End of Exercise
Cash Dividends
• In-Class Exercise (Form groups and work exercises):
Exercise
E13-23
Page
788 Dividends-Common/Preferred
(Cumulative)
Cash Dividends
Exercise E13-23:
Northern Communications has the following stockholders’ equity:
Preferred Stock – 6%, $11 Par Value; 150,000 shares
authorized, 20,000 shares issued and outstanding…….. $ 220,000
Common Stock -- $3 Par Value; 575,000 shares
authorized, 400,000 shares issued and outstanding…… $1,200,000
Retained Earnings……………………………………………... $ 190,000
Requirements:
(1) Assuming the preferred stock is cumulative, compute the amount
of dividends to preferred stockholders and stockholders for 2014
and 2015 if total dividend are if total dividends are $12,200 in 2014
and $55,000 in 2015.
(2) Record the journal entries for 2014, assuming that Northern
declared the dividend on December 1 for stockholders of record
on December 10. Northern paid the dividend on December 20.
(3) Record the journal entries for 2015, assuming that Northern
declared the dividend on December 1 for stockholders of record
on December 15. Northern paid the dividend on December 28.
Cash Dividends
Preferred Dividend Requirement
Note: Preferred stockholders are entitled to no more
than $13,200 in any one year as follow:
(a) $11 par value x 6% = $.66 per share
(b) $.66 x 20,000 shares = $13,200
Cash Dividends
Preferred dividends in arrears
$13.200 - $12,200 = $1,000
Cash Dividends
Cash Dividends
Note: Preferred stockholders are entitled to the same
$13,200 dividend requirement as in year 2014
Cash Dividends
Cash Dividends
Cash Dividends
Cash Dividends
End of Exercise
Cash and Stock Dividends
• In-Class Exercise (Form groups and work exercise):
Exercise
E13-26
Page
790
Cash and Stock Dividends
(Use the format, as reflected on the next slide,
to complete this exercise)
Cash and Stock Dividends
General Journal
Date
Description
Exercise
E13-26
Debit
Page
790
Credit
Cash and Stock Dividends
Cash and Stock Dividends
Exercise E13-26:
 Painting Schools, Inc. is authorized to issue 200,000 shares of $1 par
common stock.
 The company issued 77,000 shares at $3 per share.
 When the market price of common stock was $5 per share, Painting
declared and distributed a 10% stock dividend.
 Later, Painting declared and paid a $0.25 per share cash dividend.
Requirements:
(1) Journalize the declaration and the distribution of the stock dividend.
(2) Journalize the declaration and the payment of the cash dividend.
Cash and Stock Dividends
Dividend Shares Computation
77,000 shares x 10% = 7,700 shares
7,700 shares x $5 = $38,500
Cash and Stock Dividends
7,700 shares x $1 = $7,700
Cash and Stock Dividends
Common
Cash and Stock Dividends
77,000 shares + 7,700 shares = 84,700
84,700 shares x $0.25 = $21,175
Cash and Stock Dividends
Cash and Stock Dividends
End of Exercise
Treasury Stock Transactions
• In-Class Exercise (Form groups and work exercise):
Exercise No.
E13-30
Page
792
Treasury Stock Transactions
(Use the format, as reflected on the next slide, to
complete this exercise)
Treasury Stock Transactions
General Journal
Date
Description
Exercise
E13-30
Debit
Page
792
Treasury Stock
Credit
Treasury Stock Transactions
Exercise E13-30:
Stock transactions for Careful Driving School, Inc. follows:
Mar. 4 Issued 22,000 shares of $1 par value common stock at $18 per
share.
May 22 Purchased 1,400 shares of treasury stock – common at $11 per
share.
Sep. 22 Sold 500 shares of treasury stock – common at $24 per share.
Oct. 14
Sold 900 shares of treasury stock – common at $9 per share.
Requirement:
(1) Journalize the transactions.
Treasury Stock Transactions
Treasury Stock Transactions
End of Exercise