Question
In: Accounting
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Kinney Company at December 31, 2011, is
shown below.
| 5% preferred stock, $100 par value, 12,000 shares authorized; 5,000 shares issued and outstanding | $ 500,000 |
| Common stock, $5 par value, 400,000 shares authorized; 100,000 shares issued and outstanding | 500,000 |
| Paid-in capital in excess of par value—preferred stock | 40,000 |
| Paid-in capital in excess of par value—common stock | 600,000 |
| Retained earnings | 656,000 |
| Total stockholders' equity | $2,296,000 |
The following transactions, among others, occurred during
2012:
Apr. 1 Declared and issued a 100% stock dividend on all outstanding
shares of common stock. The market value of the stock was $11 per
share.
Dec. 7 Declared and issued a 3% stock dividend on all outstanding
shares of common stock. The market value of the stock was $14 per
share.
Dec. 20 Declared and paid (1) the annual cash dividend on the
preferred stock and (2) a cash dividend of 80 cents per common
share.
(a) Use the financial statement effects template to indicate the
effects of these separate transactions.
Use negative signs with your answers, when appropriate.
|
Balance Sheet |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + |
Contributed Capital |
+ |
Earned Capital |
|
| Apr. 1 | Answer | Answer | Answer | Answer | Answer | |||||
| Dec. 7 | Answer | Answer | Answer | Answer | Answer | |||||
| Dec. 20 | Answer | Answer | Answer | Answer | Answer | |||||
|
Income Statement |
|||||
|---|---|---|---|---|---|
Revenue |
- |
Expenses |
= |
Net Income |
|
| Answer | Answer | Answer | |||
| Answer | Answer | Answer | |||
| Answer | Answer | Answer | |||
(b) Compute retained earnings for 2012 assuming that the company
reports 2012 net income of $253,000.
$Answer
Solutions
Expert Solution
Solution a:
A small stock dividend is accounted for at market price on the date of declaration. A large stock dividend is accounted for at par value.
Therefore 100% stock dividend will be accounted at par value and 3% stock dividend will be accounted for market value
| Financial Statement Effect - Kinney Company | |||||||||
| Balance Sheet | |||||||||
| Transaction | Cash Assets | + | Non Cash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital |
| 1-Apr | $0.00 | $0.00 | $0.00 | $500,000.00 | -$500,000.00 | ||||
| 7-Dec | $0.00 | $0.00 | $0.00 | $84,000.00 | -$84,000.00 | ||||
| 20-Dec | -$189,800.00 | $0.00 | $0.00 | $0.00 | -$189,800.00 | ||||
| Financial Statement Effect - Kinney Company | |||||
| Income Statement | |||||
| Transaction | Revenue | - | Expenses | = | Net Income |
| 1-Apr | $0.00 | $0.00 | $0.00 | ||
| 7-Dec | $0.00 | $0.00 | $0.00 | ||
| 20-Dec | $0.00 | $0.00 | $0.00 | ||
Solution b:
Retained earnings for 2012 = Opening retained earnings + Net Income - Stock Dividend distributed - Cash dividend distributed
= $656,000 + $253,000 - $584,000 - $189,800 = $135,200
ekkarill92 answered 1 year agoRelated Solutions
Analyzing and Identifying Financial Statement Effects of Dividends The stockholders’ equity of Kinney Company at December...
Analyzing and Identifying Financial Statement Effects of
Dividends
The stockholders’ equity of Kinney Company at December 31, 2015, is
shown below:
5% preferred stock, $100 par value, 10,000 shares
authorized;
4,000 shares issued and outstanding
$400,000
Common stock, $5 par value, 200,000 shares authorized;
50,000 shares issued and outstanding
250,000
Paid-in capital in excess of par value-preferred stock
40,000
Paid-in capital in excess of par value-common stock
300,000
Retained earnings
656,000
Total stockholders' equity
$1,646,000
The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Kinney Company at December 31, 2011, is
shown below.
5% preferred stock, $100 par value, 10,000 shares authorized;
4,000 shares issued and outstanding
$ 400,000
Common stock, $5 par value, 200,000 shares authorized; 50,000
shares issued and outstanding
250,000
Paid-in capital in excess of par value—preferred stock
40,000
Paid-in capital in excess of par value—common stock
300,000
Retained earnings
656,000
Total stockholders' equity
$1,646,000
The following transactions, among...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Kinney Company at December 31, 2011, is
shown below.
5% preferred stock, $100 par value, 18,000 shares authorized;
8,000 shares issued and outstanding
$ 800,000
Common stock, $5 par value, 200,000 shares authorized; 50,000
shares issued and outstanding
250,000
Paid-in capital in excess of par value—preferred stock
40,000
Paid-in capital in excess of par value—common stock
300,000
Retained earnings
656,000
Total stockholders' equity
$2,046,000
The following transactions, among...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Kinney Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Kinney Company at December 31, 2011, is
shown below.
5% preferred stock, $100 par value, 28,000 shares authorized;
13,000 shares issued and outstanding
$1,300,000
Common stock, $5 par value, 320,000 shares authorized; 80,000
shares issued and outstanding
400,000
Paid-in capital in excess of par value—preferred stock
40,000
Paid-in capital in excess of par value—common stock
480,000
Retained earnings
656,000
Total stockholders' equity
$2,876,000
The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders’ equity of Palepu Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders’ equity of Palepu Company at December 31, 2015,
appears below.
During 2016, the following transactions occurred:
Required
a. Using the financial statement effects template, illustrate
the effects of these transactions.
b. Prepare the journal entries for these transactions.
c. Post the journal entries from b to the related
T-accounts.
d. Prepare a retained earnings reconciliation for 2016 assuming
that the company reports 2016 net income of $283,000. Hint: Do not...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Hammel Company at December 31, 2016, is
shown below.
5% preferred stock, $100 par value, 10,000 shares authorized;
6,000 shares issued and outstanding
$600,000
Common stock, $5 par value, 200,000 shares authorized; 70,000
shares issued and outstanding
350,000
Paid-in capital in excess of par value—preferred stock
50,000
Paid-in capital in excess of par value—common stock
400,000
Retained earnings
747,000
Total stockholders' equity
$2,147,000
The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Hammel Company at December 31, 2016, is
shown below.
5% preferred stock, $100 par value, 10,000 shares authorized;
6,000 shares issued and outstanding
$600,000
Common stock, $5 par value, 200,000 shares authorized; 70,000
shares issued and outstanding
350,000
Paid-in capital in excess of par value—preferred stock
50,000
Paid-in capital in excess of par value—common stock
400,000
Retained earnings
747,000
Total stockholders' equity
$2,147,000
The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of Hammel Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders' equity of Hammel Company at December 31, 2016, is
shown below.
5% preferred stock, $100 par value, 10,000 shares authorized;
6,000 shares issued and outstanding
$600,000
Common stock, $5 par value, 200,000 shares authorized; 70,000
shares issued and outstanding
350,000
Paid-in capital in excess of par value—preferred stock
50,000
Paid-in capital in excess of par value—common stock
400,000
Retained earnings
747,000
Total stockholders' equity
$2,147,000
The following transactions, among others,...
Identifying and Analyzing Financial Statement Effects of Dividends The stockholders’ equity of Palepu Company at December...
Identifying and Analyzing Financial Statement Effects of
Dividends
The stockholders’ equity of Palepu Company at December 31, 2015,
appears below.
Common stock, $10 par value, 200,000 shares authorized;
85,000 shares issued and outstanding
$800,000
Paid-in capital in excess of par value
480,000
Retained earnings
315,000
During 2016, the following transactions occurred:
May 12
Declared and issued a 8% stock dividend; the common stock
market value was $18 per share.
Dec. 31
Declared and paid a cash dividend of 75 cents...
Identifying and Analyzing Financial Statement Effects of Stock Transactions The stockholders' equity of Verrecchia Company at...
Identifying and Analyzing Financial Statement Effects of Stock
Transactions
The stockholders'
equity of Verrecchia Company at December 31, 2011, follows:
Common stock, $ 5 par value, 350,000 shares authorized; 150,000
shares issued and outstanding
$ 750,000
Paid-in capital in excess of par value
600,000
Retained earnings
346,000
During 2012, the following transactions occurred:
Jan. 5 Issued 10,000 shares of common stock for $12 cash per
share.
Jan. 18 Purchased 4,000 shares of common stock for the treasury at
$14 cash...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
- Do we have any online or offline tool to convert c and cpp programs into MIPS...
ADVERTISEMENT