Name: Date:

Instructor: Course:
5,000 shares of $100.00 par value,
8% 50,000 shares of
$10.00
Jan 11 Issued 20,000 $16 per share.
4,000
$50,000
$160,000
$270,000
Purchased 1,800 $17 per share.
Aug 10 Sold the 1,800 $14 per share.
Declared a $0.25
Dec 31 $175,700 net income.
320,000
200,000
120,000
50,000
160,000
270,000
400,000
80,000
30,600
30,600
25,200
5,400
30,600
175,700
175,700
32,000
32,000
shares of common stock at
Team B 7/218/2014
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
Issued to Sanchez Corp. shares of preferred stock for the following assets:
Equipment with a fair market value of
A factory building with a fair market value of
and land with an appraised value of
shares of common stock at
(Use the cost method.)
treasury shares at
per share cash dividend on the common stock and
declared the preferred dividend.
Closed the Income Summary account. There was a
Instructions:
(a) Record the journal entries for the transactions listed above.
Cash
Common Stock (20,000 shares x $10 per share)
Paid-in Capital in Excess of Par - Common Stock
Equipment
Buildings
Land
Preferred Stock (4,000 shares x $100 per share)
Paid-in Capital in Excess of Par - Preferred Stock
Treasury Account
*(The debit is made to Retained Earnings because no Paid-in Capital *from Treasury Stock exists.)
Income Summary Account
Treasury Stock
Cash
Cash
Retained Earnings
Retained Earnings
Retained Earnings
Dividends
P15-1 (Equity Transactions and Statement Preparation) On January 5, 2014, Phelps Corporation
received a charter granting the right to issue
cumulative and nonparticipating preferred stock, and
par value common stock. It then completed these transactions.
Dec 31
Jul 29
Feb 1
Jan 11, 14
Feb 1, 14
Jul 29, 14
Aug 10, 14
Dec 31, 14
Dec 31, 14
239967543.xlsx.ms_office, Problem 15-1, Page 1 of 10, 7/31/2014, 9:04 AM
Name: Date:
Instructor: Course:
Team B 7/218/2014
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
600,000
$80,000
120,000 200,000
800,000
938,300
938,300
(b) Prepare the stockholders' equity section of Phelps Corporation's balance sheet as of
December 31, 2014.
PHELPS CORPORATION
Statement of Stockholders' Equity
December 31, 2014
Capital Stock
Preferred stock, $100 par value, 8% cumulative, 5,000 shares
authorized, 4,000 shares issued and outstanding $400,000
Common stock, $10 par value, 50,000 shares authorized, 20,000
shares issued and outstanding
200,000
Total capital stock
Additional Paid-in Capital
Excess over par - preferred
Excess over par - common
Total paid-in capital
Total Paid-in capital and retained earnings
Total stockholders equity
239967543.xlsx.ms_office, Problem 15-1, Page 2 of 10, 7/31/2014, 9:04 AM
Date:
Course:
31-Oct-14 $31
30-Nov-14 $34
31-Dec-14 $38
1,800,000
1,800,000
1,800,000
1,800,000
6,120,000
1,800,000
4,320,000
1,800,000
1,800,000
(b)
(c)
P15-11. (Stock and Cash Dividends)
Instructions
Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The
balance in its Retained Earnings account at January 1, 2014, was $24,000,000, and it then had Paid-in
Capital in Excess of ParCommon Stock of $5,000,000. During 2014, the company's net income was
$4,700,000. A cash dividend of $0.60 a share was declared on May 5, 2014, and was paid June 30, 2014,
and a 6% stock dividend was declared on November 30, 2014, and distributed to stockholders of record at
the close of business on December 31, 2014. You have been asked to advise on the proper accounting
treatment of the stock dividend. The existing stock of the company is quoted on a national stock
exchange. The market price of the stock has been as follows.
To record declaration of cash dividends
To record payment of dividends declared 5/5/14
To record declaration of 6% stock dividend
Retained Earnings
Prepare the journal entry to record the declaration and payment of the cash dividend.
Prepare the journal entry to record the declaration and distribution of the stock
dividend.
5-May-14 Retained Earnings (Cash Dividends Declared)
Dividend Payable
Team B 7/218/2014
Scott Ronk ACC 423
EARNHART CORPORATION
Statement of Stockholders' Equity
December 31, 2014
Capital Stock
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
31-Dec-14 Common Stock Dividend Distributable
Common Stock
To record distribution of 6% stock dividend
Prepare the stockholders' equity section (including schedules of retained earnings and additional
paid-in capital) of the balance sheet of Earnhart Corporation for the year 2014 on the basis of the
foregoing information. Draft a note to the financial statements setting forth the basis of the
accounting for the stock dividend, and add separately appropriate comments or explanations
regarding the basis chosen.
Name:
Instructor:
30-Jun-14 Dividends Payable
Cash
Common Stock Dividend Distributable
Paid-in Capital in Excess of Par - Common Stock
30-Nov-14
(a)
30,000,000
9,320,000 9,320,000
39,320,000
60,100,000
$60,100,000
Note 1: The 6% stock dividend was valued using fair the fair value method and
based on the $34 per share market value of the stock on the date of declaration.
This method was chosen because total value of the stock represented less than 25%
of the total shares outstanding.
$30,000,000
Total paid-in capital
Total Paid-in capital and retained earnings
Total stockholders equity
Common stock, $10 par value, 3,000,000 shares issued
and outstanding
Total capital stock
Additional Paid-in Capital
Excess over par - common
Name: Date:
Instructor: Course:
9,000,000 shares of $10
2,000,000
200,000
2,000,000
4,200,000
1,500,000
10%
1,650,000
550,000
2,200,000
550,000
3,150,000
3,700,000
1,650,000
9,450,000
11,100,000
1,050,000
3
3,150,000
9,450,000
12,600,000
Stock Split on 3/31/15
Restated Stock Outstanding 1/1/15-3/31/15
Stock Outstanding 4/1/15-12/31/15
Shares outstanding
Stock Outstanding 1/1/2015-3/31/15
Outstanding Shares 4/1/13-12/31/14
Shares outstanding
(c) Compute the weighted average number of common shares to be used in computing earnings per
common share for 2014 on the 2015 comparative income statement.
Outstanding Shares 1/1/14-3/31/14
Outstanding Shares 4/1/14-12/31/14
Shares outstanding
(d) Compute the weighted average number of common shares to be used in computing earnings per
common share for 2015 on the 2015 comparative income statement.
Outstanding Shares 1/1/14-3/31/14
Shares outstanding 1/1/13-9/30/2013
Stock Dividend 9/30/13
Restated shares outstanding for 1/1/13-9/30/13
Shares outstanding 10/1/13-12/31/13
Shares outstanding
(b) Compute the weighted average number of common shares used in computing earnings per
common share for 2014 on the 2014 comparative income statement.
(a) Compute the weighted average number of common shares used in computing earnings per
common share for 2013 on the 2014 comparative income statement.
E16-15 (Weighted-Average Number of Shares) Newton Inc. uses a calendar year for financial
reporting. The company is authorized to issue
par common stock. At no time has Newton issued any potentially dilutive securities. Listed below is a
summary of Newtons common stock activities.
1. Number of common shares issued and outstanding at December 31, 2012
2. Shares issued as a result of a 10% stock dividend on September 30, 2013
3. Shares issued for cash on March 31, 2014
Number of common shares issued and outstanding at December 31, 2014
4. A 2-for-1 stock split of Gogeans common stock took place on March 31, 2015
Instructions:
Team B 07/21/14
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
239967543.xlsx.ms_office, Exercise 16-15, Page 5 of 10, 7/31/2014, 9:04 AM
Name: Date:
Instructor: Course:
E16-20.
$1,000,000
2,000,000
Instructions
100 $
6 $
10,000
60,000 $
300,000 $
60,000
240,000 $
Weighted Average Shares Outstanding: 285,000
Calculation of Preferred Stock Dividends
Par Value of Preferred Stock:
Dividend Payable per Share ($100 x 6%)
Total Shares Outstanding
Total Preferred Dividend Payable (10,000 x $6)
Income Available to Common Stockholders
Net Income
Preferred Dividends
Income Available to Common
Stockholders
Outstanding Shares Jul 1 - Sep 30 (200,000 + 50,000 + 80,000) x 3/12 82,500
Outstanding Shares Oct 1 - Dec 31 (200,000 + 50,000 + 80,000 + 30,000) x 3/12 90,000
Outstanding Shares Jan 1 - Mar 31 200,000 x 3/12 50,000
Outstanding Shares Apr 1 - Jun 30 (200,000 + 50,000) x 3/12 62,500
On May 14, 2014, Lennon realized a $90,000 (before taxes) insurance gain on the expropriation of investments
originally purchased in 2000.
On December 31, 2014, Lennon recorded net income of $300,000 before tax and exclusive of the gain.
Assuming a 50% tax rate, compute the earnings per share data that should appear on the financial statements of
Lennon Industries as of December 31, 2014. Assume that the expropriation is extraordinary.
Weighted Average Shares
Period Equation Outstanding Shares
Company A April 1, 2014 50,000
Company B July 1, 2014 80,000
Company C October 1, 2014 30,000
On January 1, 2014, Lennon Industries had stock outstanding as follows.
6% Cumulative preferred stock, $100 par value, issued and outstanding 10,000 shares
Common stock, $10 par value, issued and outstanding 200,000 shares
To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 160,000
common shares. The acquisitions took place as shown below.
Date of Acquisition Shares Issued
(EPS: Simple Capital Structure)
Team B 7/218/2014
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
Income
Information
(A)
Weighted
Shares (B)
240,000 $ 285,000
45,000 $ 285,000
Income available to common stockholders 285,000 $ 285,000
240,000 $
45,000
285,000 $
0.84 $
0.16
1.00 $
1.00 $
Income Statement Presentation
Income before exraordinary item
Extraordinary gain, net of tax
Net income
Earnings per share:
Income before extraordinary item
Extraordinary item, net of tax
Net Income
Earnings per Share
(Calculated by A/B)
Income before extraordinary item available to
common stockholders 0.84 $
Extraordinary Gain Net of Tax ($90,000 x 50%)
0.16 $
Earnings per Share Calculations
Name: Date:
Instructor: Course:
E16-25
EPS with Convertible Bonds and Preferred Stock) On January 1, 2012, Lindsey Company
issued 10-year, $3,000,000 face value, 6% bonds, at par. Each $1,000 bond is convertible
into 15 shares of Lindsey common stock. Lindseys net income in 2013 was $240,000, and its
tax rate was 40%. The company had 100,000 shares of common stock outstanding
throughout 2012. None of the bonds were converted in 2012.
Team B 7/218/2014
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
(b) Compute diluted earnings per share for 2012, assuming the same
facts as above, except that $1,000,000 of 6% convertible preferred
stock was issued instead of the bonds. Each $100 preferred share is
convertible into 5 shares of Lindsey common stock.
(a) Compute diluted earnings per share for 2012.
Shares outstanding
Shares outstanding if bonds are converted
(2,000,000 1,000 15)
Total Shares Outstanding
100,000
30,000
130,000
Net Income 372,000 $
Earnings per Share (372,000 / 145,000)
2.86 $
Net Income 300,000 $
Earnings per Share (300,000 / 150,000)
2.00 $
Shares outstanding 100,000
Shares outstanding if preferred stock is
converted (1,000,000 100 5) 50,000
Total Shares Outstanding 150,000
Name: Date:
Instructor: Course:
E16-29
Date Fair Value
Cumulative
Compensation
Recognizable
Percentage
Accrued
Compensation
Accrued to Date
Expense
2010
Expense
2011
Expense
2012
Expense
2013
12/31/2010 $4 $480,000 25% $120,000 $120,000
-60,000 $60,000
12/31/2011 $1 120,000 50% $60,000
930,000 $930,000
12/31/2012 $11 1,320,000 75% 990,000
90,000 $90,000
12/31/2013 $9 1,080,000 100% $1,080,000
(Stock-Appreciation Rights)
On December 31, 2009, Flessel Company issues 120,000 stock appreciation rights to its
officers entitling them to receive cash for the difference between the market price of its
stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4
per SAR on December 31, 2010; $1 on December 31, 2011; $11 on December 31, 2012;
and $9 on December 31, 2013. The service period is 4 years, and the exercise period is 7
years.
(a) Prepare a schedule that shows the amount of compensation expense allocable to
each year affected by the stock-appreciation rights plan.
(b) Prepare the entry at December 31, 2014, to record compensation expense, if any,
in 2014.
Compensation Expense
Liability Under Stock Appreciation Plan
90,000
90,000
Team B 7/218/2014
Scott Ronk ACC 423
Intermediate Accounting, 15
th
Edition by Kieso, Weygandt, and Warfield
Cash 1,080,000
c) Prepare the entry on December 31, 2014, assuming that all 150,000 SARs are
exercised.
Liability Under Stock Appreciation Plan 1,080,000