Name: Homework #3 (due on Wednesday 6/24/15 in class) Question 1 Finding Amounts Missing from the Stockholders’ Equity Section 2013 Shareholders’ equity: Preferred stock $100 Par 15 000 Paid-in Capital in Excess of Par – Preferred Stock 3 000 Common stock; authorized 2 000 000 shares; ? issued; 120 800 shares outstanding 826 000 Additional paid-in-capital (includes $210 000 from treasury stock transactions) 2 175 000 Retained earnings 3 152 000 Accumulated other comprehensive loss (470 000) Treasury stock (44 400 Common stock shares in 2013) at cost (524 000) 1. The number of shares of common stock issued? 2. The par value of common stock is? 3. The average sale price of the common stock when issued was $ per share. 4. Have the treasury stock transactions increased stockholders’ equity or decreased stockholders’ equity? By how much? 5. How much did the treasury stock held cost per share? 6. What is the total stockholders’ equity? 7. How many preferred stocks were issued? 8. What is the average price of the preferred stock issued? 9. Assume that the preferred stock was originally discounted at 10% by the market. What are the dividends that are promised by the preferred stock? Question 2 Recording Treasury Stock Transactions and Analyzing Their Impact May 25: Purchased in the market 400 shares of the company’s own common stock at $35 per share. Par value for the common stock was $1 per share. July 20: Sold 60 shares of treasury stock for $45 cash per share. Nov 11: Sold 40 shares of treasury stock for $10 cash per share. Required: Give the journal entries for each of these transactions Describe the impact if any that these transactions have on the income statement Question 3 Comparing Stock Dividends and Splits On August 1 2014 2E Corporation had the following capital structure: Common stock (par $5) $1 400 Capital in excess of par $42 000 Retained Earnings $20 000 Treasury stock -0- Required: Complete the following comparative tabulation based on two independent cases: Case 1: The board of directors declared and issued a 10 percent stock dividend when the stock was selling at $20 per share. Case 2: The board of directors voted a 5-to-1 stock split (i.e. a 500 percent increase in the number of shares). The market price prior to the split was $20 per share. Before Dividend After stock Items and stock split dividend After stock split Common Stock Account Par per share Shares outstanding Capital in excess of par Retained earnings Total stockholders’ equity
