Chapter 13

Exercise 13-2

Rodriguez Corporation issues 19,000 shares of its common stock for $152,000 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.

  1. The stock has a $2 par value.
  1. The stock has neither par nor stated value.
  1. The stock has a $5 stated value.

Exercise 13-4

Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.

Exercise 13-5

On June 30, 2015, Sharper Corporation's common stock is priced at $62 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows.

tockholders’ equity section of the balance sheet for Sharper Corporation is shown.

  1. Assume that the company declares and immediately distributes a 50% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists after issuing the new shares.
  1. What is the retained earnings balance?
  1. What is the amount of total stockholders' equity?
  1. How many shares are outstanding?
  1. Assume that the company implements a 3-for-2 stock split instead of the stock dividend in part 1. Answer these questions about stockholders' equity as it exists after issuing the new shares.
  1. What is the retained earnings balance?
  1. What is the amount of total stockholders' equity?
  1. How many shares are outstanding?
  1. Explain the difference, if any, to a stockholder from receiving new shares distributed under a large stock dividend versus a stock split.

Check  (1b) $1,360,000

(2a) $660,000

Exercise 13-6

The stockholders' equity of TVX Company at the beginning of the day on February 5 follows:

he stockholders’ equity section of the balance sheet of TVX Company is shown.

On February 5, the directors declare a 20% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock's market value is $40 per share on February 5 before the stock dividend. The stock's market value is $33.40 per share on February 28.

  1. Prepare entries to record both the dividend declaration and its distribution.
  1. One stockholder owned 800 shares on February 5 before the dividend. Compute the book value per share and total book value of this stockholder's shares immediately before and after the stock dividend of February 5.
  1. Compute the total market value of the investor's shares in part 2 as of February 5 and February 28.

Check  (2) Book value per share: before, $26.250; after, $21.875

Exercise 13-8

York's outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

 table shows total cash dividends paid for the years 2015-2018: 2

Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.

Check  4-year total paid to preferred, $108,000

Exercise 13-10

York's outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

 table shows total cash dividends paid for the years 2015-2018: 2

Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.

Check  4-year total paid to preferred, $108,000

Exercise 13-12

Ecker Company reports $2,700,000 of net income for 2015 and declares $388,020 of cash dividends on its preferred stock for 2015. At the end of 2015, the company had 678,000 weighted-average shares of common stock.

  1. What amount of net income is available to common stockholders for 2015?
  1. What is the company's basic EPS for 2015?

Check  (2) $3.41