Organization Stock Transactions and Dividends Part 4 (159-167)

159. Morocco Inc. reported the following results for the year ending April 30, 2014: Retained earnings, May 1, 2013 Net income Cash dividends declared Stock dividends declared $3,750,000 680,000 80,000 220,000 Prepare a retained earnings statement for the fiscal year ended April 30, 2014. Morocco Inc. Retained Earnings Statement For the Year Ended April 30, 2014 Retained earnings, May 1, 2013 Net income Less dividends declared Increase in retained earnings Retained earnings, April 30, 2014 $3,750,000 $680,000 300,000 380,000 $4,130,000 160. Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total assets, liabilities, and stockholders' equity. (1) (2) (3) (4) (1) (2) (3) (4) Declaring a cash dividend Paying the cash dividend declared in (1) Declaring a stock dividend Issuing stock certificates for the stock dividend declared in (3) Declaring a cash dividend Paying the cash dividend declared in (1) Declaring a stock dividend Issuing stock certificates for the stock dividend declared in (3) Assets _______ Liabilities _______ Stockholders' Equity _______ _______ _______ _______ _______ _______ _______ Assets 0 0 Liabilities + 0 Stockholders' Equity 0 0 0 0 0 161. Macy Company has 10,000 shares of 2% cumulative preferred stock of $50 par and 25,000 shares of $75 par common stock. The following amounts were distributed as dividends: Year 1 Year 2 Year 3 $30,000 6,000 80,000 Required: Determine the dividends per share for preferred and common stock for each year. Year 1 Year 2 Y e ar 3 Amoun$30,000 t distribu ted $6,000 Preferr 10,000 ed dividen d (10,00 0 shares) Comm $ 20,000 on dividen d (25,00 0 shares) *($4,0 00 + $10,00 0) 6,000 $ 8 0, 0 0 0 1 4, 0 0 0 * $ 0 $ 6 6, 0 0 0 Preferred stock $1.00 Common stock $0.80 $ $1.40 0. 6 0 N $2.64 o n e Divide nds per share: 162. Future Sources, Inc. reported the following results for the year ending July 31, 2012: Retained earnings, August 1, 2011 Net income Cash dividends declared Stock dividends declared $875,000 260,000 120,000 100,000 Prepare a retained earnings statement for the fiscal year ended July 31, 2012. Future Sources Inc. Retained Earnings Statement For the Year Ended July 31, 2012 Beginning retained earnings Net income Less dividends declared Increase in retained earnings Retained earnings, July 31, 2012 $875,000 $260,000 220,000 40,000 $ 915,000 163. Using the following information, prepare the Stockholders’ Equity section of the balance sheet. Seventy thousand shares of common stock are authorized and 7,000 shares have been reacquired. Common Stock, $75 par Paid-in Capital in Excess of Par Paid-in Capital from Sale of Treasury Stock Retained Earnings Treasury Stock $4,725,000 679,000 25,200 2,032,800 600,000 Stock holde rs’ Equit y Paid-i n capita l: Com mon stock, $75 par (70,0 00 share s autho rized 63,00 $4,72 0 5,000 share s issue d and 56,00 0 share outsta nding ) Paid-i 679,0 $ 5,404,000 n 00 Capit al in Exces s of Par Paid-i n Capit al from Sale of Treas ury Stock Total paid-in capital Retai ned earni ngs Total Dedu 600,000 ct treasu ry stock 25,200 $ 5,429,200 2,032,800 $ 7,462,000 Total stock holde rs’ equit y $ 6,862,000 164. The following account balances appear on the balance sheet of Osgood Industries: Common Stock (300,000 shares authorized, $100 par): $10,000,000 Paid-in Capital in Excess of Par – Common Stock: $2,000,000; Retained earnings: $45,000,000. The board of directors declared a 2% stock dividend when the market price of the stock was $135 a share. Osgood reported no income or loss for the current year. Required: (1) Journ alize the entrie s to recor d a. the declarati on of the dividend , capitaliz ing an amount equal to market value; and b. the issuance of the stock certificat es. (2) Deter mine the follo wing amou nts befor e the stock divid end was declar ed: a. Total paid-in capital; b. Total retained earnings ; and c. Total stockhol ders’ equity. (3) Deter mine the follo wing amou nts after the stock divid end was declar ed and closin g entrie s were recor ded at the end of the year: a. Total paid-in capital; b. Total retained earnings ; and c. Total stockhol ders’ equity. (1) (a) Stock 270,000* Divid ends Stock Dividends Distributable (2,000 ´ $100) Paid-In Capital in Excess of Par— Common Stock 200,000 70,000 *[($1 0,000, 000/$ 100) ´ $135] ´ 2% (b) (2) (a) (b) (c) (3) (a) (b) Stock 200,000 Divid ends Distri butabl e Common Stock $12,0 00,00 0 ($10, 000,0 00 + $2,00 0,000 ) $45,0 00,00 0 $57,0 00,00 0 ($12, 000,0 00 + $45,0 00,00 0) $12,2 70,00 0 ($12, 000,0 00 + $270, 000) $44,7 30,00 0 ($45, 000,0 00 – $270, 000) 200,000 (c) $57,0 00,00 0 ($12, 270,0 00 + $44,7 30,00 0) 165. On March 4, of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its common stock at $89 per share. On August 7, Barefoot Bay sold 3,500 of the reacquired shares at $100 per share. The remaining 1,500 shares were sold at $88 per share on November 29. Required: (1) (2) (3) Journalize the transaction of March 4, August 7, and November 29. What is the balance in Paid-in Capital from Sale of Treasury Stock on December 31, of the current year? Why might Barefoot Bay Inc. have purchased the treasury stock? (1) Mar. 4 Trea 445,000 sury Stoc k Cas 445,000 h Aug. 7 Cas 350,000 h 311,500 Treasury Stock (3,500 ´ $89) Paid-In Capital from Sale of Treasury Stock Nov. (2) $37,000 credit (3) Barefoot Bay 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. 29 38,500 Cas 132,000 h Paid 1,500 -In Capi tal from Sale of Trea sury Stoc k Treasury 133,500 Stock (1,500 ´ $89) 166. Marcos Company, which had 35,000 shares of common stock outstanding, declared a 4-for-1 stock split. Required: (1) (2) What will be the number of shares outstanding after the split? If the common stock had a market price of $280 per share before the stock split, what would be an approximate market price per share after the split? (1) 140,000 shares (35,000 ´ 4) (2) $70 per share ($280/4) 167. Selected transactions completed by Breezeway Construction during the current fiscal year are as follows: February 3 Split the common stock 2 for 1 and reduced the par from $40 to $20 per share. After the split there were 250,000 common shares outstanding. Declared semiannual dividends of $1.50 on 18,000 shares of preferred stock and $0.08 on the common stock to stockholders of record on May 10, payable on June 9. Paid the cash dividends. Declared semiannual dividends of $1.50 on the preferred stock and $0.04 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $36. Paid the cash dividends and issued the certificates for the common stock dividend. April 10 June 9 October 10 December 9 Required: Journalize the transactions. Feb. 3 No entry required. The stockholders ledger would be revised to record the increased number of shares held by each stockholder. Apr. 10 Cash 4 Divid 7, ends 0 0 0 * C 47,000 a s h D iv id e n d s P a y a bl e * [( 1 8, 0 0 0 s h ar e s ´ $ 1. 5 0 ) + ( 2 5 0, 0 0 0 s h ar e s ´ $ 0. 0 8 )] = $ 2 7, 0 0 0 + $ 2 0, 0 0 0 = $ 4 7, 0 0 0 June 9 Cash 4 Divid 7, ends 0 Payab 0 le 0 C 47,000 a s h Oct. 10 Cash 3 Divid 7, ends 0 0 0 * C 37,000 a s h D iv id e n d s P a y a bl e * [( 1 8, 0 0 0 s h ar e s ´ $ 1. 5 0 ) + ( 2 5 0, 0 0 0 s h ar e s ´ $ 0. 0 4 )] = $ 2 7, 0 0 0 + $ 1 0, 0 0 0 = $ 3 7, 0 0 0 10 Stock 1 Divid 8 ends 0, 0 0 0 * * S 100,000 to c k D iv id e n d s D is tr ib ut a bl e ( 5, 0 0 0 ´ $ 2 0 ) P 80,000 ai d -I n C a pi ta l in E x c e ss o f P ar — C o m m o n S to c k * * ( 2 5 0, 0 0 0 s h ar e s ´ 2 % ´ $ 3 6 ) = $ 1 8 0, 0 0 0 Dec. 9 Cash 3 Divid 7, ends 0 Payab 0 le 0 C 37,000 a s h 9 Stock 1 Divid 0 ends 0, Distri 0 butabl 0 e 0 C 100,000 o m m o n S to c k