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Accounting for and presentation of owners' equity

E8.4
Calculate retained earnings from the following data, calculate the retained earnings balance as of 12/31/2008

Retained earnings, 12/31/2009.........................................$490400
Net decrease in total assets during 2009............................$74800
Net increase in accounts receivable in 2009......................$17200
Dividends declared and paid in 2009.................................$67200
Proceeds from issuance of bonds during 2009..................$176800
Net loss for the year ended 12/31/2009............................$46000

P8.22
On 1/1/2008, Metco, Inc., had issued and outstanding 574600 shares of $2 par value common stock. On 3/15/2008 Metco, Inc. purchased for its treasury 4400 shares of its common stock at a price of $75 per share. On 8/10/2008 1400 of these treasury shares were sold for $84 per share. Metco's directors declared cash dividends of $1.20 per share during the 2nd quarter and again during the 4th quarter, payable on 6/30/2008, and 12/31/2008, respectively. A 2% stock dividend was issued at the end of the year. There were no other transactions affecting common stock during the year.

A. Use the horizontal model (or write the entry) to show the effect of the treasury stock purchase on 3/15/2008.
B. Calculate the total amount of the cash dividends paid in the second quarter.
C. Use the horizontal model (or write the entry) to show the effect of the sale of the treasury stock on 8/10/2008.
D. Calculate the total amount of cash dividends paid in the fourth quarter.
E. Calculate the number of shares of stock issued in the stock dividend.

P8.24
Enter the transaction letter in the first column and show the effect (if any) of each of the following transaction on each financial statement category by entering a plus (+) or minus (-) sign and the amount in the appropriate column. Do not show items that affect net income in the retained earnings column. You may also write the entries to record each transaction. Use the following format below.

Transaction Cash Other Liabilities Paid-in Retained Treasury Net
Assets Capital Earnings Stock Income

A. Sold 5.200 Shares of $10 par value preferred stock at $12.50 per share.
B. Declared the annual cash dividend of $3.20 per share on common stock. There were 18,400 shares of common stock issued and outstanding throughout the year
C. Issued 6,400 shares of $10 par value preferred stock in exchange for a building when the market price of referred stock was $14 per share.
D. Purchased 300 shares of preferred stock for the treasury at a price of $16 per share
E. Sold 140 shares of the preferred stock held in treasury (see D) for $17 per share.
F. Declared and issued a 15% stock dividend on the $1 par value common stock when the market price per share was $45.

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Solution Summary

The solution examines the accounting and presentation for owner's equity. The horizontal model to show the effect of the sale of the treasury stock is determined.

$2.19