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Journal entries for stock dividend, split; treasury stock

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Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate accounting, (12th ed.). Hoboken, NJ: John Wiley & Sons.
Please explain how you got your answers.

Problem 1:

The KYO Company's common stock information includes:

Current market price per share: $190
Current book value per share: $122
Current par value per share: $27
Shares issued and outstanding: 7,980,000

Instructions:

A. Prepare the journal entries necessary to record a 50% stock dividend.

B. Without regard to A., prepare the journal entries necessary to record a 3-for-1 stock split.

C. Discuss the differences between these methods of decreasing a stock's price from the standpoint of both the securities market and the company's accounting.

 
Problem 2:

The ZKO Company's stockholders' equity section of the balance sheet as of December 31, 2011 follows:
Preferred stock, 8%, $50 par, (10,000 shares authorized, 2,000 shares issued and outstanding) $100,000
Common stock, $7 par (180,000 shares authorized, 50,000 shares issued and outstanding) 350,000
Total capital stock $450,000
Additional paid-in capital 300,000
Total paid-in capital $750,000
Retained earnings 870,000
Total stockholder's equity $1,620,000

The ZKO Company took the following actions during 2012:

1. On February 1, issued dividend payments in the amount of $3.00 per common share and $4.00 per preferred share. The dividends were declared by the Company's board of directors on December 31, 2011.

2. On March 1, on the open stock market, purchased 7,500 shares of its own common stock at $32.

3. On April 1, acquired equipment valued at $100,800 in exchange for 3,000 of the shares of its own common stock purchased on March 1.

4. On May 1, issued 500 shares of preferred stock at $53 per share.

5. On June 1, the board of directors declared a 7% stock dividend on its outstanding common stock. On the date of the dividend, the stock was trading in the stock market at $36 per share.

6. On August 1, the company issued the stock dividend that was declared on June 1.

7. On December 31, the board of directors declared a dividend in the amount of $3.00 per common share and $4.00 per preferred share. The dividends will be paid on February 1 of the next year.

Instructions:

A. Assuming that the ZKO Company uses the cost method to account for treasury stock, prepare the journal entries necessary to record the above transactions for 2012.

B. Assuming that net income for 2012 was $730,000, prepare the stockholder's equity section of the Company's balance sheet as of December 31, 2012.
 

Problem 3:

The SDJ Company's condensed partial income statement for the year 2013 follows:

Revenue $448,000
Expenses other than interest and taxes 246,000
Net income before interest and taxes $202,000

All during 2013 the company had 56,000 shares of common stock issued and outstanding.

The Company's income tax rate is 37%.

The Company issued 160, 12% convertible bonds at their face value of $1,000. Each bond may be converted to 100 shares of common stock.

Instructions:

Compute the basic and diluted earnings per share for 2013 in each of the following independent situations:

(Note: Compute EPS to the penny.)

A. The bonds were issued during 2012. During 2013 none of the bonds were converted.

B. The bonds were issued on September 1, 2013. During 2013 none of the bonds were converted.

C. The bonds were issued during 2012. 40 of the bonds were converted on June 1, 2013.

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Your tutorial presents the steps in Excel (attached), with a tab for each ...

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Your tutorial presents the steps in Excel (attached), with a tab for each problem. Click in cells to see computations. The ZKO problem shows each equity account and how each transactions changes the balances in addition to the JEs requested so you can see how the new balances in shareholder equity are determined.

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Stockholder's Equity

Dear Brainmass,

I am having some difficulty in understanding how to prepare the journal entries for these independent transactions. I would really appreciate the assistance when you get the chance. Thank you so much in advance for taking the time to review my post.

Prepare Journal Entries for the following independent transactions:

1. Issued 300 shares of $10 par value common stock for $3,875.

2. Issued 200 shares of $5 par value common stock for $850 and 300 shares of $50 preferred stock for $18,500.

3. Issued 600 shares of no-par common stock for $10,200. Prepare journal entries if (a) the stock had no stated value, and (b) the stock has a stated value of $2 per share.

4. Issued 300 shares of $10 par value common stock and 100 shares of $50 par value preferred stock for a lump sum of $14,200. The common stock has a market value of $20 per share, and the preferred stock has a market value of $90 per share.

5. Purchased land worth $31,000 by issuing 2,000 shares of its $5 par value common stock.

6. The company has 10,000 shares of $10 par value common stock outstanding. On July 15, the company reacquired 100 shares at $85 per share. On September 15, the company sold 60 of the reacquired shares at $90 per share. On November 15, the company sold 40 of the reacquired shares at $83 per share. The company uses the Cost Method. Prepare an entry for all dates.

7. The company has 20,000 shares of $5 par value common stock outstanding. On August 15, the company reacquired 200 shares at $75 per share. On September 1, the company sold 200 of the reacquired shares at $70 per share. The company had no previous treasury stock transactions. The company uses the Cost Method. Prepare an entry for both dates.

8. Issued 450 shares of $100 par value, 8% preferred stock for $61,500. The stock is cumulative and participating.

9. On April 20, declared a dividend of $700,000 payable on June 1. Of this amount, $125,000 is a return of capital. Prepare an entry for both dates.

10. On June 1, declared a 5% stock dividend on its 200,000 shares of $10 par value common stock, when the fair value of the stock was $65 per share. The distribution date is August 15. Prepare an entry for both dates.

11. Using the same information as in #10, but assume a 75% stock dividend was declared rather than a 5% stock dividend.

12. A 3-for-1 stock split is declared when there are 300,000 shares of $15 par value common stock outstanding. (a) How many shares are outstanding after the split? (b) What is the par value per share after the split? (c) What is the total par value after the split? (d) What journal entry is required to record the split?

13. The company has outstanding 10,000 shares of $100 par value, 8% preferred stock and 60,000 shares of $10 par value common stock. The preferred stock was issued in January 2001, and no dividends were declared in 2001 or 2002. In 2003, the company declares a cash dividend of $300,000. How will the dividend be shared by common and preferred if the preferred is (a) noncumulative and (b) cumulative?

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