Page 550 - Accounting Principles (A Business Perspective)

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stated value common stock, which were originally issued at USD 160; and retained earnings of USD 1,120,000.
Following are selected transactions and other data relating to 2009. No previous treasury stock transactions had
occurred.

• The company reacquired 2,000 shares of its common stock at USD 336.
• One thousand of the treasury shares were reissued at USD 288.
• Stockholders donated 1,000 shares of common stock to the company. These shares were immediately
reissued at USD 256 to provide working capital.
• The first quarter's dividend of USD 18 per share was declared and paid on the preferred stock. No other
dividends were declared or paid during 2009.

The company suffered a net loss of USD 224,000 for the year 2009.
a. Prepare journal entries for the preceding numbered transactions.
b. Prepare the stockholders' equity section of the 2009 December 31, balance sheet.
Problem G The following stockholders' equity section is from Bell Company's 2008 October 31, balance sheet:
Stockholders' equity:
Paid-in capital:
Preferred stock - $60 par value, 6%; 1,000 $ 21,000
shares authorized; 350 shares issued and
outstanding
Common stock - $6 par value; 100,000 240,000
shares authorized; 40,000 shares issued and
outstanding
Paid-in capital from donation of plant site 15,000
Total paid-in capital $276,000
Retained earnings:
Appropriated:
Appropriation for contingencies $ 12,000
Unappropriated 33,300
Total retained earnings 45,300
Total stockholders' equity $321,300
During the ensuing fiscal year, Bell Company entered into the following transactions:
• The appropriation of USD 12,000 of retained earnings had been authorized in October 2008 because of the
likelihood of an unfavorable court decision in a pending lawsuit. The suit was brought by a customer seeking
damages for the company's alleged breach of a contract to supply the customer with certain products at stated
prices in 2007. The suit was concluded on 2009 March 6, with a court order directing the company to pay USD

10,500 in damages. These damages were not deductible in determining the income tax liability. The board
ordered the damages paid and the appropriation closed. The loss does not qualify as an extraordinary item.
• The company acquired 1,000 shares of its own common stock at USD 9 in May 2009. On June 30, it
reissued 500 of these shares at USD 7.20.
• Dividends declared and paid during the year were 6 per cent on preferred stock and 18 cents per share on
common stock. Both dividends were declared on September 1 and paid on 2009 September 30.
For the fiscal year, the company had net income after income taxes of USD 11,400, excluding the loss of the

lawsuit.
a. Prepare journal entries for the preceding numbered transactions.
b. Prepare a statement of retained earnings for the year ended 2009 October 31.
c. Prepare the stockholders' equity section of the 2009 October 31, balance sheet.
Problem H Selected data for Brinks Company for 2009 are given below:

Accounting Principles: A Business Perspective 551 A Global Text