ACCT 203 Lecture 14: Chapter 14
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[The following information applies to the questions displayed below.]
The equity sections from Atticus Groupâs 2016 and 2017 year-end balance sheets follow.
Stockholdersâ Equity (December 31, 2016) | ||
Common stockâ$5 par value, 100,000 shares authorized, 35,000 shares issued and outstanding | $ | 175,000 |
Paid-in capital in excess of par value, common stock | 135,000 | |
Retained earnings | 340,000 | |
Total stockholdersâ equity | $ | 650,000 |
Stockholdersâ Equity (December 31, 2017) | |||
Common stockâ$5 par value, 100,000 shares authorized, 41,200 shares issued, 4,000 shares in treasury | $ | 206,000 | |
Paid-in capital in excess of par value, common stock | 190,800 | ||
Retained earnings ($30,000 restricted by treasury stock) | 400,000 | ||
796,800 | |||
Less cost of treasury stock | (30,000 | ) | |
Total stockholdersâ equity | $ | 766,800 | |
The following transactions and events affected its equity during year 2017.
Jan. | 5 | Declared a $0.50 per share cash dividend, date of record January 10. | ||
Mar. | 20 | Purchased treasury stock for cash. | ||
Apr. | 5 | Declared a $0.50 per share cash dividend, date of record April 10. | ||
July | 5 | Declared a $0.50 per share cash dividend, date of record July 10. | ||
July | 31 | Declared a 20% stock dividend when the stockâs market value was $14 per share. | ||
Aug. | 14 | Issued the stock dividend that was declared on July 31. | ||
Oct. | 5 | Declared a $0.50 per share cash dividend, date of record October 10. |
Problem 13-4A Part 1
Required:
1. How many common shares are outstanding on each cash dividend date?
The following information applies to the questions displayed below.]
The equity sections from Atticus Groupâs 2016 and 2017 year-end balance sheets follow.
Stockholdersâ Equity (December 31, 2016) | ||
Common stockâ$5 par value, 100,000 shares authorized, 35,000 shares issued and outstanding | $ | 175,000 |
Paid-in capital in excess of par value, common stock | 135,000 | |
Retained earnings | 340,000 | |
Total stockholdersâ equity | $ | 650,000 |
Stockholdersâ Equity (December 31, 2017) | |||
Common stockâ$5 par value, 100,000 shares authorized, 41,200 shares issued, 4,000 shares in treasury | $ | 206,000 | |
Paid-in capital in excess of par value, common stock | 190,800 | ||
Retained earnings ($30,000 restricted by treasury stock) | 400,000 | ||
796,800 | |||
Less cost of treasury stock | (30,000 | ) | |
Total stockholdersâ equity | $ | 766,800 | |
The following transactions and events affected its equity during year 2017.
Jan. | 5 | Declared a $0.50 per share cash dividend, date of record January 10. | ||
Mar. | 20 | Purchased treasury stock for cash. | ||
Apr. | 5 | Declared a $0.50 per share cash dividend, date of record April 10. | ||
July | 5 | Declared a $0.50 per share cash dividend, date of record July 10. | ||
July | 31 | Declared a 20% stock dividend when the stockâs market value was $14 per share. | ||
Aug. | 14 | Issued the stock dividend that was declared on July 31. | ||
Oct. | 5 | Declared a $0.50 per share cash dividend, date of record October 10. |
Problem 13-4A Part 2
2. What is the total dollar amount for each of the four cash dividends?
Problem 18-12 Various shareholders' equity topics; comprehensive[LO18-1, 18-4, 18-5, 18-6, 18-7, 18-8]
Part A |
In late 2015, the Nicklaus Corporation was formed. The corporatecharter authorizes the issuance of 5,000,000 shares of common stockcarrying a $1 par value, and 1,000,000 shares of $5 par value,noncumulative, nonparticipating preferred stock. On January 2,2016, 3,000,000 shares of the common stock are issued in exchangefor cash at an average price of $15 per share. Also on January 2,all 1,000,000 shares of preferred stock are issued at $30 pershare. |
Required: |
1. | Prepare journal entries to record these transactions.(If no entry is required for a particular transaction,select "No journal entry required" in the first accountfield.) |
2. | Prepare the shareholders' equity section of the Nicklaus balancesheet as of March 31, 2016. (Assume net income for the firstquarter 2016 was $1,500,000.) |
Part B | |
During 2016, the Nicklaus Corporation participatedin three treasury stock transactions: |
a. | On June 30, 2016, the corporation reacquires 190,000 shares forthe treasury at a price of $17 per share. |
b. | On July 31, 2016, 45,000 treasury shares are reissued at $20per share. |
c. | On September 30, 2016, 45,000 treasury shares are reissued at$15 per share. |
Required: |
1. | Prepare journal entries to record these transactions.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.) |
2. | Prepare the Nicklaus Corporation shareholders' equity section asit would appear in a balance sheet prepared at September 30, 2016.(Assume net income for the second and third quarter was$2,950,000.) |
Part C |
On October 1, 2016, Nicklaus Corporation receives permission toreplace its $1 par value common stock (5,000,000 shares authorized,3,000,000 shares issued, and 2,900,000 shares outstanding) with anew common stock issue having a $.50 par value. Since the new parvalue is one-half the amount of the old, this represents a 2-for-1stock split. That is, the shareholders will receive two shares ofthe $.50 par stock in exchange for each share of the $1 par stockthey own. The $1 par stock will be collected and destroyed by theissuing corporation. |
On November 1, 2016, the NicklausCorporation declares a $0.13 per share cash dividend on commonstock and a $0.30 per share cash dividend on preferred stock.Payment is scheduled for December 1, 2016, to shareholders ofrecord on November 15, 2016. |
On December 2, 2016, the NicklausCorporation declares a 1% stock dividend payable on December 28,2016, to shareholders of record on December 14. At the date ofdeclaration, the common stock was selling in the open market at $15per share. The dividend will result in 58,000 (0.01 Ã 5,800,000)additional shares being issued to shareholders. |
Required: |
Prepare journal entries to record the declaration and payment ofthese stock and cash dividends. (If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.) 1.Record the entry for a 2-for-1 stock split. 2.Record declaration of cash dividend for common shares andpreferred shares. 3.Record the entry on date of record. 4.Record payment of cash dividend for common shares andpreferred shares. 5.Record declaration of common stock dividend. 6.Record distribution of common stock dividend. | |
2. | Prepare the December 31, 2016, shareholders' equity section ofthe balance sheet for the Nicklaus Corporation. (Assume net incomefor the fourth quarter was $2,450,000.) |
3. | Prepare a statement of shareholders' equity for NicklausCorporation for 2016. (Amounts to be deducted should beindicated with a minus sign. Enter your answers inthousands.) |