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Common Stock

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

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.

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