Accounting
Spring 2006 Chapter 10 Homework Submit your answers in CANVAS before it is due Match the following terms with their definitions (not every letter is used) 1. Treasury shares 2. Issued shares 3. Additional paid-in-capital 4. Paid-in Capital 5. Outstanding shares a. The earnings not paid out in dividends. b. Shareholders can lose no more than the amount they invested in the company. c. The corporation’s own stock that is reacquired. d. The amount invested by stockholders. e. Total number of shares available to sell. f. The amount invested by owners above par value. g. Shares held by stockholders. h. Shares receive priority for future dividends, if dividends are not paid in a given year. i. Shares actually sold. Use the following to answer questions 6 – 12 JR, Inc., has two classes of stock authorized: $50.00 par preferred and $0.10 par value common. As of the beginning of 20XC, 5,000 shares of preferred stock and 250,000 shares of common stock have been issued. Record the following transactions to complete the Statement of Stockholders’ Equity: Effect on Stockholders’ Equity 1-Mar Issue 1,000 additional shares of preferred stock for $52.00 per share 1-Apr Issue 100,000 additional shares of common stock for $12 per share 1-Jun Declare a cash dividend on both common and preferred stock of $1.25 per share to all stockholders of record on June 15. 30-Jun Pay the cash dividend declared on June 1. 1-Aug Repurchase 20,000 shares of common treasury stock for $15.00 per share 1-Oct Reissue 5,000 shares of treasury stock purchased on August 1 for $17.00 per share 31-Dec Net income for the year was $625,000 The beginning balances are shown below. Complete the Statement of Stockholders’ Equity using the above information: Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity Beginning balance 20XC $250,000 $25,000 $3,475,000 $685,200 $0 $4,435,200 Issuance of stock Net income for the year Less: Dividends Purchase of Treasury Sale of Treasury Ending balance 20XC Then answer the following questions: 6.$____________ When the shares were issued on March 1, how much did additional paid in capital increase? 7.$______________On June 1st when the dividend was declared, how much did retained earning decrease? 8. $__________ On August 1st when the shares were repurchased, how much did stockholders’ equity decrease? 9.$____________ On August 1st when the shares were repurchased, how much did net income decrease? 10.$____________On October 1st when the shares were reissued, how much did additional paid in capital change (if decrease put “-“ in front of the number)? 11.$______________Compute ending retained earnings on December 31st. 12.$______________Compute ending stockholders equity on December 31st. Use the following to answer questions 13 - 17 KC Corp.’s management is considering either a 100% stock dividend or a 2-for-1 stock split. Complete the following chart to assist in answering the following: Before After 100% Stock Dividend After 2-for-1 Stock Split Common stock, $0.20 par value $40,000 Additional paid-in capital 6,480,000 Total paid-in capital 6,520,000 Retained Earnings 1,250,000 Total stockholders’ equity $7,770,000 Shares outstanding 200,000 Par value per share $0.20 Share price $230.00 13.$______________ After the 100% stock dividend what amount is in Total paid-in capital account? 14.$______________After the 100% stock dividend what amount is in the retained earnings account? 15.$____.___ ___After the 100% stock dividend what is the par value per share? 16.$_______________After the 2-for-1 stock split what amount is in Total paid in capital account? 17.$____.___ ___ After the 2-for-1 stock split what is the par value per share? Use the following to answer questions 18 - 22 Attention Men’s Wear, Inc. Balance Sheet (Stockholders’ Equity Section) At December 31, 20XE Preferred stock, $25 par value $25,000 Common stock, $0.10 par value 100,000 Additional Paid in capital 13,500,250 Total paid in capital 13,625,250 Retained earnings 994,100 Treasury stock (270,000) Total stockholders' equity $14,349,350 18.________shares. How many shares of preferred stock have been issued? 19._______________shares. How many shares of common stock have been issued? 20.$_____.__ __ per share. If the preferred shares were issued at an average price of $25.25 per share. At what price per share were the common shares issued? 21.$___________If retained earnings at the beginning of the period was $876,300 and Net income was $412,900, what were the declared dividends for the year? 22._________shares. If the treasury stock was reacquired at $18.00 per share, how many shares were reacquired? Use the following to answer questions 23 - 26 The company was organized on January 3, 20XE. The firm was authorized to issue 100,000,000 shares of $0.05 par common stock. During 20XE, the company earned $725,000 in net income and had the following transactions relating to shareholders' equity: Per share Shares Common stock APIC Effect on Total Stockholders’ Equity Issued common stock (January) $12.00 800,000 Issued common stock (July) $13.00 200,000 Outstanding shares 950,000 Dividends declared $0.15 Net income for the year Treasury stock $26.00 23.$__________________What is total Paid-in capital at the end of 20XE? 24. $__________________What is the additional paid-in capital at the end of 20XE? 25.$__________________What is total retained earnings at the end of 20XE? 26.$__________________What is total stockholders’ equity at the end of 20XE? Use the following to answer questions 27 – 34 The company reports the following amounts in its December 31, 20XF income statement: Sales $1,005,000 Advertising expense $100,000 Gain on sale of equipment 10,000 Net sales 985,000 income tax expense 30,000 Salaries expense 295,000 Cost of goods sold 435,000 Sales returns 20,000 Utilities expense 14,000 Average shares outstanding 100,000 27. $____________Determine gross profit: 28. $____________Determine operating expenses: 29. $____________Determine Income before income taxes (IBT): 30. $____________Determine net income: 31. ___ ___. ___ %. Calculate gross profit ratio (one decimal place) 32.__ __ . __ __ %. Calculate the profit margin (two decimal places) 33.$________Calculate Earnings per Share (rounded to two decimal places) 34.$____________If ending inventory consisted of $36,000 and beginning inventory was $41,000 how much inventory was purchased during the year? Chapter 10Page 10-1