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    Common Stock

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    Problem:
    Indicate on the blanks below the effect (I = increase, D = decrease, NE = no effect) of a stock split on each of the items listed.

    _____1. Assets _____5. Total stockholders' equity

    _____2. Balance of Common Stock account _____6. Par value per share

    _____3. Total contributed capital _____7. Total number of shares

    _____4. Total retained earnings outstanding

    Tobias Corporation has 40,000 shares of $10 par value common stock outstanding. Prepare journal entries without explanations for the following transactions. (Market value of the stock was $l5.00 on December l6 and $15.50 on December 23.). Retained earning balance was $50,000.

    Dec. 16 Declared a l5 percent stock dividend.

    20 Distributed the stock dividend

    22 Declared a 2-for1 stock split, distributable on Dec. 27 to stockholders of record as of Dec. 23.

    25 Declared and paid a cash dividend of $ .10 per share to be distributed on Dec.

    30 to stockholders on record as of Dec. 27.

    3. At December 31, 20x7, the book value per share of common stock of Big Time Corporation amounted to $21 per share. Determine the effect of each of the following items on the book value per share of common stock computation assuming each item occurs after December 31, 20x7. Consider each item independently of the other items listed. Indicate your answer for each (I = increase, D = decrease, or NE = no effect) in the appropriate blank.

    _____1. Sale of newly issued shares of common stock at $23 per share

    _____2. Purchase of treasury stock for $156 per share

    _____3. Declaration of current cash dividends on preferred stock

    _____4. Declaration and distribution of stock dividends on common stock

    _____5. Sale of treasury stock (purchased at $16 per share) for $19 per share

    _____6. Entry to close net income for the period to the Retained Earnings account

    _____7. Dividends in arrears on preferred stock

    _____8. Purchase of a truck with cash

    _____9. Payment of a previously declared and recorded cash dividend on common stock

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    Solution Preview

    Problem:
    Indicate on the blanks below the effect (I = increase, D = decrease, NE = no effect) of a stock split on each of the items listed.

    NE 1. Assets NE 5. Total stockholders' equity

    NE 2. Balance of Common Stock account D 6. Par value per share

    NE 3. Total contributed capital I 7. Total number of shares

    NE 4. Total retained earnings outstanding

    Tobias Corporation has 40,000 shares of $10 par value common stock outstanding. Prepare journal entries without explanations for the following transactions. (Market value of the stock was ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer the accounting questions.

    $2.19

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