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Chapter 13: 1RQ (page 707)
What is a corporation?
A corporation is an organization that includes generally a group of people or a company that is authorized by the state to act as a single entity and recognized as such in law for specific purposes.
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Journalizing treasury stock transactions and reporting stockholders鈥� equity
Southern Amusements Corporation had the following stockholders鈥� equity on
November 30:
Paid-In Capital:
Common Stock鈥擻(5 Par Value; 1,300 sharesauthorized, 250 shares issued and outstanding1,250
Retained Earnings50,000
Total Stockholders鈥� Equity \) 55,000
Stockholders鈥� Equity
Paid-In Capital in Excess of Par鈥擟ommon 3,750
Total Paid-In Capital
\(5,000
On December 30, Southern purchased 200 shares of treasury stock at \)15 per share.
Requirements
2. Prepare the stockholders鈥� equity section of the balance sheet at December 31, 2018. Assume the balance in retained earnings is unchanged from November 30.
Journalizing a stock dividend and reporting stockholders鈥� equity
The stockholders鈥� equity of Lakeside Occupational Therapy, Inc. on December 31, 2017, follows:
Common Stock鈥擻(1 Par Value; 1,200 shares
authorized, 400 shares issued and outstanding
Paid-In Capital:
120,000
400
2,000
Retained Earnings
Total Stockholders鈥� Equity \) 122,000
Stockholders鈥� Equity
Paid-In Capital in Excess of Par鈥擟ommon 1,600
Total Paid-In Capital
\(
On April 30, 2018, the market price of Lakeside鈥檚 common stock was \)16 per share and the company declared a 13% stock dividend. The stock was distributed on May 15.
Requirements
1. Journalize the declaration and distribution of the stock dividend.
Analyzing the effect of prior-period adjustments
Taylor Corporation discovered in 2019 that it had incorrectly recorded in 2018 a cash payment of \(70,000 for utilities expense. The correct amount of the utilities expense was \)35,000.
Requirements
2. How should this error be reported in the 2019 financial statements?
How does cumulative preferred stock differ from non-cumulative preferred stock?
Question: Identifying sources of equity, stock issuance, and dividends
Tillman Comfort Specialists, Inc. reported the following stockholders鈥� equity on its balance sheet at June 30, 2018:
Preferred Stock鈥�5%, ? Par Value; 625,000 shares
authorized, 325,000 shares issued and outstanding
Paid-In Capital:
\( 1,300,000
1,350,000
Stockholders鈥� Equity
Paid-In Capital in Excess of Par鈥擟ommon 2,600,000
Total Paid-In Capital 5,250,000
Retained Earnings 11,800,000
Total Stockholders鈥� Equity \) 17,050,000
Common Stock鈥擻(1 Par Value; 7,000,000 shares
authorized, 1,350,000 shares issued and outstanding
Requirements
4. No preferred dividends are in arrears. Journalize the declaration of a \)200,000 dividend at June 30, 2018, and the payment of the dividend on July 20, 2018. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.
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