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Chapter 13: Q31E (page 715)

Reporting stockholders鈥� equity after a stock split

Wood Golf Club Corp. had the following stockholders鈥� equity at December 31, 2017:

Common Stock鈥擻(1 Par Value; 650 sharesauthorized, 270 shares issued and outstanding

Paid-In Capital:

2,600

\) 270

810

Retained Earnings

Total Stockholders鈥� Equity $ 3,410

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 540

Total Paid-In Capital

On June 30, 2018, Wood Golf Club split its common stock 2-for-1. Prepare the stockholders鈥� equity section of the balance sheet immediately after the split. Assume the balance in retained earnings is unchanged from December 31, 2017.

Short Answer

Expert verified

Total shareholders鈥� equity of the company is $3,410

Step by step solution

01

Basic Introduction

NumberofSharesPost-Split=NumberofShares脳StockSplit=270脳2=540

StockPricePost-Split=StockPriceBeforeStockSplitStockSplit=$12=$0.5

02

Balance sheet (Partial)

Balance sheet (Partial)

Dec 31, 2017

Shareholders鈥� Equity

Common Stock鈥�$0.5 Par Value; 650 shares authorized, 540shares issued andoutstanding

$270

Paid-In Capital in Excess of Par鈥擟ommon

$540

$810

Retained Earnings

$2,600

Total Stockholders鈥� Equity

$3,410

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Most popular questions from this chapter

What does earnings per share report, and how is it calculated?

Question: Organizing a corporation and issuing stock

Jimmy and Randy are opening a comic store. There are no competing comic stores in the area. They must decide how to organize the business. They anticipate profits of \(550,000 the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice.

Requirements

3. If they decide to issue \)3 par common stock and anticipate an initial market price of \(75 per share, how many shares will they need to issue to raise \)3,000,000?

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�$1 Par Value; 7,000,000 shares

authorized, 1,350,000 shares issued and outstanding

Requirements

1. Identify the different classes of stock that Tillman Comfort Specialists has outstanding.

Journalizing issuance of stock

Steller Systems completed the following stock issuance transactions:

May 19 Issued 1,700 shares of \(3 par value common stock for cash of \)10.50 per share.

Jun. 3 Issued 300 shares of \(9, no-par preferred stock for \)15,000 cash.

11 Received equipment with a market value of \(68,000 in exchange for 5,000 shares of the \)3 par value common stock.

Requirements

1. Journalize the transactions. Explanations are not required.

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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