Chap 15 - Selected Ex & Prob

EXERCISE 15­1 (a) June 15Retained Earnings (110,000 X $1).............. Dividends Payable......................... 110,000 July 10 110,000 Dec. 15 134,400

110,000

Dividends Payable................................. Cash................................................

110,000

Retained Earnings (112,000 X $1.20). . . Dividends Payable.........................

134,400

(b) In   the   retained   earnings   statement,   dividends   of   $244,400  will be deducted. In the balance sheet, Dividends Payable of  $134,400   will   be reported as a current liability. EXERCISE 15­2 (a)

(b)

Total dividend declaration Allocation to preferred stock Remainder to common stock

2004 $6,000   6,000 $    0

2005 $12,000     8,000 $ 4,000

2006 $28,000     8,000 $20,000

Total dividend declaration Allocation to preferred stock Remainder to common stock

2004 $6,000   6,000 $    0

2005 $12,000   12,0001 $     0

2006 $28,000     9,000 $19,000

Cumulative dividend for Year 1, $3,000 + current dividend  for Year 2, $9,000. 1

(c) Dec. 31

Retained Earnings....................................

28,000

28,000

Dividends Payable............................

PROBLEM 15­1B (a) Feb.  1  75,000 Mar.  1  75,000

 75,000

Dividends Payable................................. Cash................................................

 75,000

Apr.  1

Memo—two­for­one stock split   increases number of shares to   150,000 = (75,000 X 2) and reduces   par value to $10 per share.

July  1

Retained Earnings (15,000 X $13)........ Common Stock Dividends   Distributable (15,000 X $10)......

150,000 45,000 31 150,000 Dec.  1 82,500 31 350,000 (b)

Retained Earnings (75,000 X $1).......... Dividends Payable.........................

195,000

Paid­in Capital in Excess of   Par Value (15,000 X $3).............. Common Stock Dividends   Distributable....................................... Common Stock..............................

150,000

Retained Earnings (165,000 X $.50)..... Dividends Payable.........................

82,500

Income Summary.................................. Retained Earnings.........................

350,000

Common Stock Date Jan.  1 Apr.  1 July 31

Explanation Balance 2 for 1 split—new   par $10

Ref.

Debit

Credit

Balance 1,500,000

150,000

1,650,000



PROBLEM 15­1B (Continued) Paid­in Capital in Excess of Par Value Date Jan.  1 July  1

Explanation Balance

Ref.

Debit



Credit

Balance 200,000 245,000

45,000

Retained Earnings Date Jan. Feb. July Dec.

 1  1  1  1 31

Explanation Balance Cash dividend Stock dividend Cash dividend Net income

Ref.



Debit  75,000 195,000   82,500

Credit

Balance 600,000 525,000 330,000 247,500 597,500

350,000

Common Stock Dividends Distributable Date July  1 31

(c)

Explanation

Ref.

Debit 150,000

Credit 150,000

Balance 150,000       0

ARGENTINA CORPORATION Balance Sheet (Partial) December 31, 2005

Stockholders’ equity Paid­in capital Capital stock Common stock, $10 par value, 165,000   shares issued and outstanding............... $1,650,000 Additional paid­in capital In excess of par value................................... 245,000 Total paid­in capital............................... 1,895,000

   

597,500

Retained earnings........................................................

$2,492,500

Total stockholders’ equity....................