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Chapter 13: 6RQ (page 707)
What is par value?
Par value or nominal value is considered as the face value of a stock stated in the corporate charter. It is often set at a very price, for instance, $10.
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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.
Question: Accounting for cash dividends
Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.
Requirements
2. Journalize for Java the entry paying the cash dividends on January 4, 2019.
Question - Describing corporation characteristics
Due to recent beef recalls, Southwest Steakhouse is considering incorporating. Bob, the owner, wants to protect his personal assets in the event the restaurant is sued.
Requirements
1. Which advantage of incorporating is most applicable? What are other advantages of organizing as a corporate entity?
Preparing a corporate income statement
ABC Corporation鈥檚 accounting records include the following items, listed in no particular order, at December 31, 2018:
Other Income and (Expenses) \( (7,200) Cost of Goods Sold \) 30,000
Net Sales 81,000 Operating Expenses 25,000
Gain on Discontinued Operations 3,600
The income tax rate for ABC Corporation is 39%.
Prepare ABC鈥檚 income statement for the year ended December 31, 2018. Omit earnings per share. Use the multi-step format.
Computing rate of return on common stockholders鈥� equity Wyler, Inc.鈥檚 2018 balance sheet reported the following items鈥攚ith 2017 figures given for comparison:
Total Assets Total Liabilities and Stockholders鈥� Equity Total Liabilities Total Stockholders鈥� Equity (all common) WYLER, INC. Balance Sheet As of December 31, 2018, and December 31, 2017 \( 39,600 December 31, 2018 17,100 22,500 18,500 14,962 December 31, 2017 \) 39,600 \( 33,462 \) 33,462 Net income for 2018 was $3,690.
Compute Wyler鈥檚 rate of return on common stockholders鈥� equity for 2018.
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