ACCT 2101 Chapter Notes - Chapter 10: Treasury Stock, Stock Split, Debits And Credits

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blushcricket309

1 May 2016

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Paid- in capital- amount stockholders have invested in the corporation. Retained earnings- amount of earnings the corporation has earned. Treasury stock- corporation"s own stock that it has reacquired, preferred or common stock that company has bought back. Authorized- shares available to sell (issued and unissued) Outstanding- shares held by investors (excludes treasury stock) Par value- legal capital per share of stock that"s assigned when the corporation is first established (what we think its worth when first made) No relationship to the market value of the common stock. Additional paid- in capital- issue common stock above par value. Usually have first rights to a specified amount of dividends. Do not get to vote that is job of common stockholders for the most part. Convertible- shares can be exchanged for common stock. Redeemable- shares can be returned to the corporation at a fixed price. Cumulative- preferred stockholders get everything from years passed.

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The shareholdersâ equity section of Superior Corporationâs balance sheet as of December 31, 2015, is as follows: Shareholdersâ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 33,000 shares $3,300,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 377,000 shares 1,885,000 Paid-in capital in excess of parâpreferred 96,000 Paid-in capital in excess of parâcommon 825,000 Retained earnings 2,920,000 $9,026,000 The following events occurred during 2016: Jan. 5 10,500 shares of authorized and unissued common stock were sold for $7 per share. 16 10,000 shares of authorized and unissued preferred stock were sold for $108 per share. Apr. 1 79,000 shares of common stock were repurchased for the treasury at a price of $21 per share. Superior uses the cost method to account for treasury stock. Sept. 1 3,500 shares of preferred stock are issued in exchange for a piece of land. The land has an appraised value of $389,500. The preferred stock currently trades on the New York Stock Exchange at a price of $109 per share. Dec. 1 24,000 shares of treasury stock are reissued at a price of $24 per share. Required: 1. Prepare journal entries for each of the above transactions. 2. Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2016. 3. Calculate Superiorâs legal capital at December 31, 2016.

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Shareholdersâ Equity Preferred stock, $100 par value;authorized, 330,000 shares; issued, 33,000 shares $3,300,000 Commonstock, $5 par value; authorized, 2,200,000 shares; issued, 440,000shares 2,200,000 Paid-in capital in excess of parâpreferred 99,000Paid-in capital in excess of parâcommon 935,000 Retained earnings2,200,000 $8,734,000 The following events occurred during 2013:Jan. 5 50,000 shares of authorized and unissued common stock weresold for $8 per share. Jan. 16 50,000 shares of authorized andunissued preferred stock were sold for $107 per share. April 190,000 shares of common stock were repurchased for the treasury ata price of $19 per share. Superior uses the cost method to accountfor treasury stock. Sept. 1 5,000 shares of preferred stock areissued in exchange for a piece of land. The land has an appraisedvalue of $542,000. The preferred stock currently trades on the NewYork Stock exchange at a price of $107 per share. Dec. 1 15,000shares of treasury stock are reissued at a price of $24 pershare

3. Calculate Superior's legal capital at December 31, 2013.Total legal capital : $

I need help with #3. Please explain how you got the answer.

tockholdersâ Equity
	Contributed capital
	Preferred stock (par $20; authorized 12,000 shares, ? issued, of which 700 shares are held as treasury stock)	$	160,000
	Common stock (no-par; authorized 23,000 shares, issued and outstanding 7,000 shares)		651,000
	Contributed capital (includes $3,400 from treasury stock transactions)		19,400
	Retained earnings		52,000
	Cost of treasury stock, preferred		(14,700	)

Required:

1.	Calculate the number of shares of preferred stock issued

2.	Calculate the number of shares of preferred stock outstanding

3.	Calculate the average sale price of the preferred stock when issued. (Round your answer to 2 decimal places.)

4.	Have the treasury stock transactions increased corporate resources or decreased corporate resources? By how much? (Enter the amount as positive value.)

5.	By how much the treasury stock transactions increased (decreased) stockholdersâ equity? (Enter the amount as positive value.)

6.	How much did the treasury stock held cost per share? (Round your answer to 2 decimal places.)

7.	Calculate the value of total stockholdersâ equity

8.	Calculate the average issue price of the common stock: (Round your answer to 2 decimal places.)

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ACCT 2101 Chapter Notes - Chapter 10: Treasury Stock, Stock Split, Debits And Credits

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