MOS 3361 chapter 15 solutions

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 3361A/B
Professor
Prof
Semester
Winter

Description
Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition CHAPTER 15 SHAREHOLDERS’ EQUITY EXERCISE 15-3 (10-15 minutes) (a) 1. Cash [(6,000 X $30) – $2,000]......................... 178,000 Common Shares...................................... 178,000 2. Land (3,750 X $32) .......................................... 120,000 Common Shares...................................... 120,000 Note: The market value of the share ($120,000) is used to value the exchange because it is a more objective measure than the appraised value of the land ($140,000). 3. Common Shares (500 X $38).......................... 19,000 Contributed Surplus ............................... 4,500 Cash (500 X $29)......................................14,500 (b) Share repurchases are recorded at the average issue price per share, or the average price at which the shares were issued for that class of shares. The original issue price of the individual shares being repurchased is not used. The original issue price of the individual shares repurchased would be considered in the total issue price for the class of shares but would be averaged with all other shares of the same class. Solutions Manual 15-1 Chapter 15 Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, WiecIntermediate Accounting, Ninth Canadian Edition EXERCISE 15-6 (20-30 minutes) (a) Preferred Common Total Dividends in arrears (1) $250,000 $250,000 Current year dividend (2) 125,000 $180,000 305,000 Participating dividend (3) 25,000 60,000 85,000 Total $400,000 $240,000 $640,000 (1) Dividends in arrears: 25,000 X $5 X 2 = $250,000 (2) Current year dividend: Preferred: 25,000 X $5 = $125,000 Common: Number of shares issued 60,000 X $3 $ 180,000 (3) Participating dividend: Since the common shareholders have received a $4 per share dividend, $1 per share is in excess of the $3 dividend per share participation threshold. Excess dividend $1 Number of common shares outstanding X 60,000 Excess total dividend $60,000 Common share capital  $1,800,000 Excess return 3.33% Apply excess return to preferred shareholders’ capital X $750,000 Participating dividend to preferred Shareholders $25,000 Solutions Manual 15-2 Chapter 15 Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition EXERCISE 15-6 (Continued) (b) Retained Earnings ....................................9 ..................... Common Stock Dividend Distributable...................................................... 5,000 (60,000 X 15% X $105) (c) Common Shares .......................................3 ..................... Contributed Surplus .................................7 ..................... Cash (10,500 X $105) .......................................1 ..... 2,500 ($1,800,000 / 60,000 X 10,500 = $315,000) Solutions Manual 15-3 Chapter 15 Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition EXERCISE 15-14 (30-35 minutes) (a) 1. Dividends Payable—Preferred (2,000 X $8) ............................................,................. Dividends Payable—Common (25,000 X $3) ...........................................,................. Cash................................................................00 2. Common Shares.......................................1 ...,................. Contributed Surplus...............................1 .....,................. Cash (3,700 X $35).........................................1 .......00 ($100,000 / 25,000 X 3,700 = $14,800) 3. Cash (1,000 X $105)................................1 .....,................. Preferred Shares ...........................................1.......00 4. Retained Earnings....................................9 ...,................. Common Stock Dividend Distributable...................................................50 [(25,000 – 3,700) X 10% = 2,130 X $45] 5. Common Stock Dividend Distributable.........................................,................. Common Shares..............................................9 ......50 6. Retained Earnings....................................7 ...,................. Dividends Payable—Preferred (3,000 X $8) .........................................
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