Page 552 - Accounting Principles (A Business Perspective)

This book is licensed under a Creative Commons Attribution 3.0 License

Appropriation for contingencies $210,000
Appropriation for plant expansion 392,000
Retained earnings, unappropriated 700,000
During October 2009, the company took action to:
• Increase the appropriation for contingencies by USD 60,000.
• Decrease the appropriation for plant expansion by USD 160,000.
• Establish an appropriation per loan agreement, with an annual increase of USD 48,000.
• Declare a cash dividend of USD 140,000.
Prepare the journal entries to record these transactions of Falcone Company.
Alternate problem D Following are selected transactions of Taylor Corporation:

2004
Dec. 31 By action of the board of directors, USD 450,000 of retained earnings was appropriated to provide for
future expansion of the company's main building. (On the last day of each of the next four years, the same action
was taken. You need not make entries for these years.)
2009
Jan. 3 Obtained, at a cost of USD 4,500, a building permit to construct a new wing on the main plant building.
July 30 Paid USD 1,800,000 to Starke Construction Company for completion of the new wing.
Aug. 4 The board of directors authorized the release of the sum appropriated for expansion of the plant building.
4 The board of directors declared a 10 per cent common stock dividend on the 25,000 shares of USD 500 par

value common stock outstanding. The market price on this date was USD 660 per share.
Prepare journal entries to record all of these transactions.
Alternate problem E The following information relates to Dahl Corporation for the year 2009:
Net income for the year $ 1,680,000
Dividends declared on common stock 235,000
Dividends declared on preferred stock 134,000
Retained earnings, January 1, unappropriated 5,040,000
Appropriation for retirement of bonds 672,000
Balance in “Appropriation for possible loss of a lawsuit”, no longer
needed on December 31 because of a favorable court decision, is (by
directors' order) returned to unappropriated retained earnings 840,000
Prepare a statement of retained earnings for the year ended 2009 December 31.

Alternate problem F The stockholders' equity of Acorn Company as of 2008 December 31, consisted of
20,000 shares of authorized, issued, and outstanding USD 50 par value common stock, paid-in capital in excess of
par of USD 240,000, and retained earnings of USD 400,000. Following are selected transactions for 2009:
May 1 Acquired 3,000 shares of its own common stock at USD 100 per share.
June 1 Reissued 500 shares at USD 120.
30 Reissued 700 shares at USD 90.
Oct. 1 Declared a cash dividend of USD 5 per share.
31 Paid the cash dividend declared on October 1.
Net income for the year was USD 80,000. No other transactions affecting retained earnings occurred during the

year.
a. Prepare general journal entries for these transactions.
b. Prepare the stockholders' equity section of the 2009 December 31, balance sheet.

Accounting Principles: A Business Perspective 553 A Global Text