Reporting and Analyzing Stockholders' Equity
Not what you're looking for?
Problem Set P11-2A
The stockholders' equity accounts of Alpha Corporation on January 1, 2007, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $400,000
Common Stock ($5 stated value, 300,000 shares authorized) $1,000,000
Paid-in Capital in Excess of Par Value?Preferred Stock $15,000
Paid-in Capital in Excess of Stated Value - Common Stock $480,000
Retained Earnings $688,000
Treasury Stock - Common (5,000 shares) $40,000
During 2007 the corporation had the following transactions and event pertaining to its stockholders' equity
Feb. 1 Issued 3,000 shares of common stock for $18,600
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared an 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2007.
Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.
(a) Journalize the transactions. (Include entries to close net income to Retained Earnings)
(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders' equity accounts (Use T accounts)
(c) Prepare the stockholders' equity section of the balance sheet at December 31, 2007.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders' equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)
Purchase this Solution
Solution Summary
The solution explains the journal entries, how to prepare the stockholders equity section and calculate some ratios.
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Motivation
This tests some key elements of major motivation theories.