Page 542 - Accounting Principles (A Business Perspective)

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Solution to demonstration problem
Solution to demonstration problem A
a. Retained earnings (or dividends) (-SE) 15,000
Dividends payable (+L) 15,000
To record declaration of a cash dividend.
b.
Retained earnings (or stock dividends)
(1,000 shares x $185) (-SE) 185,000
Stock dividend distributable – Common
(1,000 shares x $150) (+L) 150,000
Paid-in capital – Stock dividends(+SE) 35,000
To record declaration of a small stock dividend
(10%).
c.
Retained earnings (or stock dividends) (4,000 600,000
shares x $150) (-SE)
Stock dividend distributable – Common (+L) 600,000
To record declaration of a large stock dividend
(40%).
Solution to demonstration problem B
1. Treasury stock (-SE) 20,600
Cash (-A) 20,600
Acquired 200 shares at $20,600 ($103 per
share).
2. Cash (50 shares x $110) (+A) 5,500
Treasury stock – Common (50 shares x 5,150
$103) (+SE)
Paid-in capital – common treasury stock 350
transactions (+SE)
Reissued 50 shares at $110 per share; cost is
$5,150.

3. Cash (70 shares x $95) (+A) 6,650
Paid-in capital – Common treasury stock
transactions 350
(50 shares x $7) (-SE)
Retained earnings (-SE) 210
Treasury stock – common (70 shares x $103) 7,210
(+SE)
Reissued 70 shares at $95 per share; cost is
$7,210.
4. Stockholders donated 100 shares of common stock to the company. (Only memo entry is made.)
5. Cash (+A) 9,000
Paid-in capital – Donations (100 shares 9,000
x $90) (+SE)
Reissued donated shares at $90 per
share.
Solution to demonstration problem C
Nexis Corporation
Partial balance sheet
2010 December 31
Stockholders' equity:
Paid-in capital:
Preferred stock – 8%, par value $200; 1,000 $200,000
shares authorized, issued, and outstanding
Common stock – no par value, stated value of 2,000,000
$20 per share; 100,000 shares authorized,
issued, and outstanding
Paid-in capital from donation of plant site 100,000
Paid-in capital in excess of par value – preferred8,000
Total paid-in capital $2,308,0
00
Retained earnings 570,000
Total stockholders' equity $2,878,0

Accounting Principles: A Business Perspective 543 A Global Text