EXERCISES

Ex. 121
Class

1st Year

2nd Year

$1.50

Preferred
Common

3rd Year

4th Year

5th Year

$2.00
0.201

$2.00
0.642

$2.00
0.803

3rd Year

4th Year

5th Year

$1.50
3.30

$1.50
1.20

$50,000 250,000
$160,000 250,000
3
$200,000 250,000
2

Ex. 122
Class

1st Year

2nd Year

$0.50

Preferred
Common

*Third-year dividends:
Arrears dividend, preferred......................
Current dividend, preferred......................
Total.......................................................

$4.00*
.80
Total
Dividends

Dividends per Share

Preferred

$25,000
15,000
$40,000

$2.50
1.50
$4.00

Ex. 123
a. Mar.

Aug.

10 Cash................................................................
Common Stock.........................................
Paid-In Capital in Excess of Par
Common Stock.........................................

900,000

9 Cash................................................................
Preferred Stock.........................................
Paid-In Capital in Excess of Par
Preferred Stock.........................................

525,000

b. $1,425,000 ($900,000 + $525,000)

600,000
300,000
500,000
25,000

Ex. 124
a. Nov.

Dec.

2 Cash................................................................
Common Stock.........................................
Paid-In Capital in Excess of
Stated Value..............................................

375,000

3 Cash................................................................
Preferred Stock.........................................
Paid-In Capital in Excess of Par
Preferred Stock.........................................

65,000

125,000
250,000
50,000
15,000

b. $440,000 ($375,000 + $65,000)

Ex. 125
Feb. 27 Land.........................................................................
Common Stock.................................................
Paid-In Capital in Excess of Par......................

292,000
40,000
252,000

Ex. 126
a.

Cash..................................................................................
Common Stock...........................................................

20,000

b. Organization Costs..........................................................
Common Stock...........................................................

1,000

Cash ................................................................................
Common Stock...........................................................

19,000

Land ................................................................................
Building............................................................................
Interest Payable*........................................................
Mortgage Note Payable.............................................
Common Stock...........................................................

45,000
150,000

c.

20,000
1,000
19,000

*An acceptable alternative would be to credit Interest Expense.

1,000
125,000
69,000

Ex. 127
Buildings.................................................................................
Land.........................................................................................
Preferred Stock.................................................................
Paid-In Capital in Excess of Par
Preferred Stock.................................................................

95,000
40,000

Cash.........................................................................................
Common Stock..................................................................
Paid-In Capital in Excess of Par
Common Stock..................................................................

565,000

100,000
35,000
450,000
115,000

Ex. 128
Jan.

6 Cash........................................................................
Common Stock.................................................

250,000

11 Organization Costs................................................
Common Stock.................................................

1,500

Feb. 28 Land.........................................................................
Buildings.................................................................
Equipment...............................................................
Common Stock.................................................
Paid-In Capital in Excess of Par
Common Stock.................................................

20,000
100,000
18,000

Mar. 15 Cash........................................................................
Preferred Stock.................................................
Paid-In Capital in Excess of Par
Preferred Stock.................................................

510,000

250,000
1,500

115,000
23,000
500,000
10,000

Ex. 129
a. Mar.
July

Dec.

1 Treasury Stock...............................................
Cash...........................................................

220,000

8 Cash................................................................
Treasury Stock..........................................
Paid-In Capital from Sale of
Treasury Stock..........................................

150,500

19 Cash................................................................
Paid-In Capital from Sale of
Treasury Stock...............................................
Treasury Stock..........................................

78,000

220,000
140,000
10,500

2,000
80,000

b. $8,500 credit
c. Stockholders' Equity section
d. Chico Springs may have purchased the stock to support the market price of
the stock, to provide shares for resale to employees, or for reissuance to
employees as a bonus according to stock purchase agreements.

Ex. 1210
a. Sept.
Nov.

Dec.

6 Treasury Stock...............................................
Cash...........................................................

540,000

15 Cash................................................................
Treasury Stock..........................................
Paid-In Capital from Sale
of Treasury Stock.....................................

186,000

21 Cash................................................................
Treasury Stock..........................................
Paid-In Capital from Sale
of Treasury Stock.....................................

273,000

540,000
180,000
6,000
270,000
3,000

b. $9,000 credit
c. $90,000 debit
d. The balance in the treasury stock account is reported as a deduction from the
total of the paid-in capital and retained earnings.

Ex. 1211
a. July
Aug.

Dec.

1 Treasury Stock...............................................
Cash...........................................................

120,000

10 Cash................................................................
Treasury Stock..........................................
Paid-In Capital from Sale of
Treasury Stock..........................................

64,500

19 Cash................................................................
Paid-In Capital from Sale of
Treasury Stock...............................................
Treasury Stock..........................................

58,500

120,000
60,000
4,500

1,500
60,000

b. $3,000 credit
c. Stockholders Equity section
d. Heavenly Inc. may have purchased the stock to support the market price of
the stock, to provide shares for resale to employees, or for reissuance to
employees as a bonus according to stock purchase agreements.

Ex. 1212
a. 90,000 shares (30,000 3)
b. $40 per share ($120 3)

Ex. 1213
Assets
(1)
(2)
(3)
(4)
(5)

Declaring a stock dividend

Issuing stock certificates for
the stock dividend declared
in (1)
Declaring a cash dividend
Paying the cash dividend
declared in (3)
Authorizing and issuing stock
certificates in a stock split

Stockholders
Liabilities
Equity

0
0

0
+

Ex. 1214
Jan.

4 Cash Dividends......................................................
Cash Dividends Payable..................................

Feb.

3 No entry required.

Mar.

5 Cash Dividends Payable.......................................

Cash...................................................................

75,000
75,000
75,000
75,000

Ex. 1215
a.

(1) Stock Dividends.........................................................

Stock Dividends Distributable............................
Paid-In Capital in Excess of Par
Common Stock.....................................................

4,560

(2) Stock Dividends Distributable..................................

Common Stock.....................................................

3,000

b. (1) $362,500
(2) $471,000
(3) $833,500
c. (1) $367,060
(2) $466,440
(3) $833,500

3,000
1,560
3,000

Ex. 1216
Jan.

7 No entry required. The stockholders ledger would be revised to record

the increased number of shares held by each stockholder.

Mar.

1 Cash Dividends......................................................
Cash Dividends Payable..................................

36,000*
36,000

* [(8,000 shares $2) + (200,000 shares

$0.10)]
Apr. 15 Cash Dividends Payable.......................................
Cash...................................................................

36,000

Nov.

66,000*

1 Cash Dividends......................................................
Cash Dividends Payable..................................

36,000
66,000

* [(8,000 shares $2) + (200,000 shares

$0.25)]
1 Stock Dividends.....................................................
Stock Dividends Distributable........................
Paid-In Capital in Excess of
ParCommon Stock........................................

60,000**
50,000
10,000

** (200,000 shares 1% $30)

Dec. 15 Cash Dividends Payable.......................................
Cash...................................................................

66,000

15 Stock Dividends Distributable..............................

Common Stock.................................................

50,000

66,000
50,000

Ex. 1217
a. Cisco Systems, Inc., paid no dividends in 2000 and 1999. In its annual report,
Cisco Systems states that it has never paid cash dividends and has no
present plans to do so.
b. Investors are apparently attracted to Cisco Systems, Inc., because their main
objective is a rapid increase in the market price of the stock.

Ex. 1218
a. 2.1% ($1.00 $47.44)
b. Hersheys dividend yield is relatively low. Thus, it is likely that most
stockholders are looking for an increase in market price rather than current
dividends.

PROBLEMS
Prob. 121A
1.
Preferred Dividends
Year

Total
Dividends

Total

Per Share

$32,000
65,000
84,000
60,000
72,000
95,000

$32,000
65,000
53,000*
50,000
50,000
50,000

$ 1.28
2.60
2.12
2.00
2.00
2.00
$ 12.00

1999........................
2000........................
2001........................
2002........................
2003........................
2004........................

Common Dividends
Total
$

0
0
31,000
10,000
22,000
45,000

Preferred
Dividends
* Arrears dividend, preferred........................................
Current dividend, preferred........................................
Total..........................................................................

$ 3,000
50,000
$53,000

2. Average annual dividend for preferred: $2 per share ($12 6)

Average annual dividend for common: $0.36 per share ($2.16 6)
3.

a.

2% ($2 $100)

b.

4.5% ($0.36 $8)

Per Share
$

0
0
0.62
0.20
0.44
0.90
$ 2.16

Prob. 122A
Mar.

7 Building...................................................................
Land.........................................................................
Common Stock.................................................
Paid-In Capital in Excess of Par
Common Stock.................................................

375,000
75,000

21 Cash........................................................................
Preferred Stock.................................................
Paid-In Capital in Excess of Par
Preferred Stock.................................................

625,000

29 Cash........................................................................
Mortgage Note Payable....................................

200,000

400,000
50,000
500,000
125,000
200,000

Prob. 122A

Concluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that

accompanies this text is used.
OSAKA CORP.
Balance Sheet
March 31, 20
Assets
Cash...................................................................................
Accounts receivable.........................................................
Merchandise inventory.....................................................
Prepaid insurance.............................................................
Supplies.............................................................................
Total current assets...................................................
Land....................................................................................
Building..............................................................................
Total plant assets.......................................................

$ 1,200,000
426,325
584,550
75,225
101,945
$2,388,045
$

75,000
375,000
450,000

Total assets.......................................................................
Liabilities
Accounts payable.............................................................
Cash dividends payable...................................................
Total current liabilities...............................................
Mortgage note payable.....................................................

$2,838,045
$
$

357,500
86,840
444,340
200,000

Total liabilities...................................................................

644,340

Stockholders Equity
Paid-in capital:
Preferred stock..........................................................
Excess of issue price over parPS........................
Common stock...........................................................
Excess of issue price over parCS........................
Donated capital..........................................................
From sale of treasury stock......................................
Total paid-in capital...............................................
Retained earnings.............................................................
Total.............................................................................
Deduct treasury stock......................................................
Total stockholders equity................................................
Total liabilities and stockholders equity........................

500,000
125,000
400,000
50,000
200,000
35,000
$ 1,310,000
999,705
$ 2,309,705
116,000
2,193,705
$2,838,045

Prob. 123A
a.

Cash..................................................................................
Common Stock...........................................................
Paid-In Capital in Excess of ParCommon
Stock............................................................................

200,000

b. Cash..................................................................................
Preferred Stock..........................................................
Paid-In Capital in Excess of ParPreferred
Stock............................................................................

90,000

c.

100,000
100,000
75,000
15,000

Treasury Stock.................................................................
Cash.............................................................................

105,000

d. Cash..................................................................................
Treasury Stock...........................................................
Paid-In Capital from Sale of Treasury Stock...........

75,000

e.

Cash..................................................................................
Paid-In Capital from Sale of Treasury Stock.................
Treasury Stock...........................................................

20,000
1,000

Cash Dividends................................................................
Cash Dividends Payable...........................................
[(8,000 $2.25) + (39,000 $0.50)]

37,500

g. Cash Dividends Payable.................................................

Cash.............................................................................

37,500

f.

105,000
63,000
12,000

21,000
37,500

37,500

Prob. 123A

Concluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that

accompanies the text is used.
CYMA ENVIRONMENTAL CORP.
Balance Sheet
June 30, 2004
Assets
Cash.........................................................................................
$ 392,800
Accounts receivable..............................................................
602,200
Merchandise inventory..........................................................
809,300
Prepaid insurance..................................................................
46,400
Supplies...................................................................................
85,000
Equipment............................................................................... $ 1,132,900
Less accumulated depreciation....................................
69,000
1,063,900
Total assets.............................................................................
$ 2,999,600
Liabilities
Accounts payable...................................................................

835,100

Stockholders Equity
Paid-in capital:
Preferred stock................................................................ $ 600,000
Excess of issue price over parPS..............................
75,000
Common stock................................................................
400,000
Excess of issue price over parCS.............................
200,000
From sale of treasury stock...........................................
11,000
Total paid-in capital..................................................... $ 1,286,000
Retained earnings..................................................................
899,500
Total.................................................................................. $ 2,185,500
Deduct treasury stock...........................................................
21,000
Total stockholders equity.....................................................
2,164,500
Total liabilities and stockholders equity.............................
$ 2,999,600

Prob. 124A
1. and 2.
Common Stock
Jan. 1
Feb. 19
Aug. 11

Bal.

1,600,000
200,000
90,000
1,890,000

Paid-In Capital in Excess of Stated Value

Jan. 1 Bal.
300,000
Feb. 19
150,000
July 1
99,000
549,000

Dec. 31

Jan. 1 Bal.
Oct. 20
285,000

Retained Earnings
267,300 Jan. 1 Bal.
Dec. 31
727,100
Treasury Stock
120,000 Apr. 1
285,000
405,000

625,000
369,400
994,400

120,000

Paid-In Capital from Sale of Treasury Stock

Apr. 1
20,000
Donated Capital
Jan. 10

100,000

Stock Dividends Distributable

90,000 July 1

90,000

Stock Dividends
189,000 Dec. 31

189,000

Dec. 27

Cash Dividends
78,300 Dec. 31

78,300

Aug. 11

July

Prob. 124A

Continued

2.
Jan. 10 Land.........................................................................
Donated Capital................................................
100,000

100,000

30 Cash Dividends Payable.......................................

Cash...................................................................
76,000

76,000

Feb. 19 Cash........................................................................
Common Stock.................................................
200,000
Paid-In Capital in Excess of Stated Value......
150,000

350,000

Apr.

1 Cash........................................................................
Treasury Stock..................................................
120,000
Paid-In Capital from Sale of Treasury Stock.
20,000

140,000

July

189,000*

1 Stock Dividends.....................................................
Stock Dividends Distributable........................
90,000
Paid-In Capital in Excess of Stated Value......
99,000
*(80,000 + 10,000) 5% $42

Aug. 11 Stock Dividends Distributable..............................

Common Stock.................................................
90,000

90,000

Oct. 20 Treasury Stock.......................................................

Cash...................................................................
285,000

285,000

Dec. 27 Cash Dividends......................................................

Cash Dividends Payable..................................
78,300

78,300**

**(80,000 + 10,000 + 4,500 7,500) $0.90

31 Income Summary...................................................
Retained Earnings............................................
369,400

369,400

31 Retained Earnings.................................................
Stock Dividends................................................
189,000

267,300

Cash Dividends.................................................
78,300
3. $3,001,100 ($1,890,000 + $549,000 + $727,100 $285,000 + $20,000 +
$100,000)

Prob. 124A

Concluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that

accompanies the text is used.
SASQUATCH ENTERPRISES INC.
Balance Sheet
December 31, 20
Assets
Cash.........................................................................................
307,223
Accounts receivable..............................................................
385,900
Merchandise inventory..........................................................
1,109,800
Prepaid insurance..................................................................
72,260
Supplies...................................................................................
90,900
Land.........................................................................................
736,400
Equipment............................................................................... $
Less accumulated depreciation....................................
570,217
Total assets.............................................................................
3,272,700
Liabilities
Accounts payable................................................................... $
Cash dividends payable........................................................
Total liabilities.........................................................................
271,600

668,717
98,500
$

221,800
49,800

Stockholders Equity
Paid-in capital:
Common stock................................................................ $ 1,890,000
Excess of issue price over stated value.......................
549,000
Donated capital...............................................................
100,000
From sale of treasury stock...........................................
20,000
Total paid-in capital..................................................... $ 2,559,000
Retained earnings..................................................................
727,100
Total.................................................................................. $ 3,286,100
Deduct treasury stock...........................................................
285,000
Total stockholders equity.....................................................
3,001,100

Total liabilities and stockholders equity.............................

3,272,700

Prob. 125A
Jan.

6 No entry required. The stockholders ledger would be revised to

record the increased number of shares held by each stockholder.

Mar. 13 Treasury Stock.......................................................

Cash...................................................................
262,500

262,500

May

121,500*

1 Cash Dividends......................................................
Cash Dividends Payable..................................
121,500
*(18,000 $2) + [(150,000 7,500) $0.60]

June 1 Cash Dividends Payable.......................................

Cash...................................................................
121,500

121,500

Sept. 17 Cash........................................................................
Treasury Stock..................................................
87,500
Paid-In Capital from Sale of Treasury
Stock..................................................................
12,500

100,000

Nov.

123,000*

2 Cash Dividends......................................................
Cash Dividends Payable..................................
123,000
*(18,000 $2) + [(150,000 5,000) $0.60]
2 Stock Dividends.....................................................
Stock Dividends Distributable........................
72,500
Paid-In Capital in Excess of ParCommon
Stock..................................................................
37,700

110,200**

**(150,000 5,000) 2% $38

Dec.

3 Cash Dividends Payable.......................................

Cash...................................................................
123,000

123,000

3 Stock Dividends Distributable..............................

Common Stock.................................................
72,500

72,500

Prob. 125A

Concluded

This solution is applicable only if the GENERAL LEDGER SOFTWARE that

accompanies the text is used.
SILVER GATE BOATING SUPPLY CORPORATION
Balance Sheet
December 31, 20
Assets
Cash.........................................................................................
96,209
Accounts receivable..............................................................
174,564
Merchandise inventory..........................................................
561,812
Prepaid insurance..................................................................
65,235
Office supplies........................................................................
73,601
Land.........................................................................................
447,221
Equipment............................................................................... $
Less accumulated depreciation....................................
340,227
Total assets.............................................................................
1,758,869
Liabilities
Accounts payable...................................................................
249,310

492,850
152,623
$

Stockholders Equity
Paid-in capital:
Common stock................................................................ $ 1,042,500
Excess of issue price over par......................................
302,400
From sale of treasury stock...........................................
12,500
Total paid-in capital..................................................... $ 1,357,400
Retained earnings..................................................................
437,159
Total.................................................................................. $ 1,794,559
Deduct treasury stock...........................................................
285,000
Total stockholders equity.....................................................
1,509,559
Total liabilities and stockholders equity.............................
$
1,758,869