Group Work Chapter 11
- Myers Inc.’s state charter Authorizes 2,000,000 shares. At December 31, 2007, Myers Inc. had a total of 750,000 shares Unissued and 1,100,000 shares Outstanding. How many shares were in Treasury at December 31, 2007?
Treasury Shares = $150,000
- Skye Inc.’s Board of Directors announced, on March 10, 2007, they would pay $130,000 in dividends to stockholders.
Skye Inc. has $500,000 par, 8% shares of Preferred Stock outstanding on record. Assume Skye Inc. did not pay dividends in year 2006 (the prior year).
On May 15th, the cash dividends were distributed.
a) What is the journal entrySkye Inc. will prepare on March 10, 2007 (Date of Declaration) to recognize the commitment to pay dividends?
March 10, 2007Retained Earnings130,000
Dividends Payable130,000
b)What is the journal entry Skye Inc. will prepare on May 15th (Date of Dividend Payment) to recognize the cash payment to stockholders?
May 15, 2007Dividends Payable130,000
Cash130,000
c)If the Preferred Stock is Cumulative, what portion of the dividend distribution would go to the Preferred Stockholders? What remaining portion will go to Common Stockholders?
Cumulative Preferred Stock - $40,000 + $40,000 = $80,000
Common Stockholders$50,000
d)If the Preferred Stock is Non-Cumulative, what portion of the dividend distribution would go to the Preferred Stockholders? What remaining portion will go to Common Stockholders?
Non-Cumulative Preferred Stock- $40,000
Common Stockholders $90,000
3.Padilla Inc. issued 5,000 shares of stock at a market price of $36 per share. The Corporate Charter for Padilla Inc. requires a PAR value of $1 per share. Prepare the journal entry to record this sale of stock for Padilla Inc.
Cash $180,000
Common Stock$ 5,000
Paid In Capital in Excess of Par$175,000
4.a)On February 12, 2007, Berry Inc. purchased [reacquired] 5,000 shares of its $10 par value common stock outstanding, paying $25 per share. Prepare the journal entry to record this purchase of Treasury Stock.
Treasury Stock$125,000
Cash$125,000
b)On May 20, 2007, Berry Inc. reissued [sold] 1,000 shares of the Treasury Stock that was acquired on February 12, 2007. The Treasury shares were sold at $35 per share. Prepare the journal entry to record this reissue [sale] of the Treasury stock.
Cash$35,000
Treasury Stock25,000
Paid in Capital in Excess 10,000
c)On May 20, 2007, Berry Inc. reissued [sold] 1,000 shares of the Treasury Stock that was acquired on February 12, 2007. The Treasury shares were sold at $20 per share. Prepare the journal entry to record this reissue [sale] of the Treasury stock.
Cash20,000
Retained Earnings 5,000
Treasury Stock25,000
- Pearce Inc. reported total Stockholders’ Equity at 12/31/2008 of $406,000. During 2009, Pearce Inc. reported Net Income of $48,000. Also during 2009, Pearce Inc. declared and paid Cash Dividends to stockholders of $50,000, and they issued additional Common Stock during 2009 of $30,000. Based on this information, what would be the balance of Stockholders’ Equity for Pearce Inc. at 12/31/2009?
Stockholders’ Equity Beginning Balance$406,000
Net Income$ 48,000
Cash Dividends$( 50,000)
Common Stock$ 30,000
Stockholders’ Equity Ending Balance$434,000