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Chapter 15

Management and Organizational Studies 3361A/B Chapter Notes - Chapter 15: John Wiley & Sons, Dividend, Retained Earnings


Department
Management and Organizational Studies
Course Code
MOS 3361A/B
Professor
Prof
Chapter
15

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
Solutions Manual 15-1 Chapter 15
Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
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.

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
Solutions Manual 15-2 Chapter 15
Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
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:
$125,000
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.
$1
X 60,000
$60,000
$1,800,000
3.33%
X $750,000
$25,000
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