LO 14.1You are an accountant working for a company that has recently decided to incorporate. The company has incurred $4,300 for attorney’s fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on March 13, assuming they are paid in cash?
LO 14.1What is the impact on stockholders’ equity when a company uses debt financing as a source of funding?
LO 14.2Fortuna Company is authorized to issue 1,000,000 shares of $1 par value common stock. In its first year, the company has the following transactions:
| Jan. 31 | Issued 40,000 shares at $10 share |
| Jun. 10 | Issued 100,000 shares in exchange for land with a clearly determined value of $850,000 |
| Aug. 3 | Purchased 10,000 shares of treasury stock at $9 per share |
Journalize the transactions and calculate how many shares of stock are outstanding at August 3.
LO 14.2James Incorporated is authorized to issue 5,000,000 shares of $1 par value common stock. In its second year of business, the company has the following transactions:
| Mar. 31 | Issued 30,000 shares at $10 share |
| Jul. 9 | Issued 100,000 shares in exchange for a building with a clearly determined value of $700,000 |
| Aug. 30 | Purchased 7,000 shares of treasury stock at $9 per share |
Journalize the transactions.
LO 14.2McVie Corporation’s stock has a par value of $2. The company has the following transactions during the year:
| Feb. 28 | Issued 300,000 shares at $5 share |
| Jun. 7 | Issued 90,000 shares in exchange for equipment with a clearly determined value of $200,000 |
| Sep. 19 | Purchased 3,000 shares of treasury stock at $7 per share |
Journalize the transactions.
LO 14.2Anslo Fabricating, Inc. is authorized to issue 10,000,000 shares of $5 stated value common stock. During the year, the company has the following transactions:
| Jan. 3 | Issued 60,000 shares at $10 share |
| Jun. 15 | Issued 5,000 shares in exchange for office equipment with a clearly determined value of $50,000 |
| Aug. 16 | Purchased 4,000 shares of treasury stock at $20 per share |
Journalize the transactions.
LO 14.2St. Marie Company is authorized to issue 1,000,000 shares of $5 par value preferred stock, and 5,000,000 shares of $1 stated value common stock. During the year, the company has the following transactions:
| Jan. 31 | Issued 140,000 common shares at $10 share |
| Jun. 10 | Issued 160,000 preferred shares in exchange for land with a clearly determined value of $850,000 |
| Aug. 3 | Issued 10,000 shares of common stock for $9 per share |
Journalize the transactions.
LO 14.3Nutritious Pet Food Company’s board of directors declares a cash dividend of $1.00 per common share on November 12. On this date, the company has issued 12,000 shares but 2,000 shares are held as treasury shares. What is the journal entry to record the declaration of this dividend?
LO 14.3Nutritious Pet Food Company’s board of directors declares a cash dividend of $1.00 per common share on November 12. On this date, the company has issued 12,000 shares but 2,000 shares are held as treasury shares. The company pays the dividend on December 14. What is the journal entry to record the payment of the dividend?
LO 14.3Nutritious Pet Food Company’s board of directors declares a cash dividend of $5,000 on June 30. At that time, there are 3,000 shares of $5 par value 5% preferred stock outstanding and 7,000 shares of $1 par value common stock outstanding (none held in treasury). What is the journal entry to record the declaration of the dividend?
LO 14.3Nutritious Pet Food Company’s board of directors declares a small stock dividend (20%) on June 30 when the stock’s market value per share is $30. At that time, there are 10,000 shares of $1 par value common stock outstanding (none held in treasury). What is the journal entry to record the declaration of the dividend?
LO 14.4Blanket Company has paid quarterly dividends every quarter for the past 15 years. Lately, slowing sales have created a cash crunch for the company. While the company still has positive retained earnings, the retained earnings balance is close to zero. Should the company borrow to continue to pay dividends? Why or why not?
LO 14.4Farmington Corporation began the year with a retained earnings balance of $20,000. The company paid a total of $3,000 in dividends and earned a net income of $60,000 this year. What is the ending retained earnings balance?
LO 14.4Montana Incorporated began the year with a retained earnings balance of $50,000. The company paid a total of $5,000 in dividends and experienced a net loss of $25,000 this year. What is the ending retained earnings balance?
LO 14.4Jesse and Mason Fabricating, Inc. general ledger has the following account balances at the end of the year:
What is the total ending balance as reported on the company’s Statement of Stockholder’s Equity?
LO 14.4Roxanne’s Delightful Candies, Inc. began the year with a retained earnings balance of $45,000. The company had a great year and earned a net income of $80,000. However, the company’s controller determined that it had made an error when calculating depreciation in the preceding year, resulting in an understated depreciation expense amount of $2,000. What is the ending retained earnings balance?
LO 14.5Jupiter Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is Jupiter Corporation’s weighted average number of shares for the year?
LO 14.5Longmont Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is the numerator of the EPS calculation for Longmont?
LO 14.5James Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is the EPS for the year for James (rounded to the nearest dollar)?