Student Name: Instructor Class: McGraw-Hill/Irwin Problem 19-06 Requirement 1: WALTERS AUDIO VISUAL, INC.

Total Compensation Cost ($ in millions, except "per option" amounts) At January 1, 2011, the estimated value of the award is: Estimated fair value per option Options granted Total compensation

$ $
Correct!

2 40 80

WALTERS AUDIO VISUAL, INC. General Journal ($ in millions) Account Requirement 2: Compensation expense Paid-in capital - stock options Deferred tax asset Tax expense Requirement 3: Compensation expense Paid-in capital - stock options Deferred tax asset Tax expense Requirement 4: Cash Paid-in capital - stock options Common stock (40 million shares at $1 par per share) Paid-in capital - excess of par Income taxes payable Deferred tax asset Paid-in capital - tax effect of stock options Debit 40 40 16 16
- Correct! - Correct!

Credit

40 40 16 16
- Correct! - Correct!

320 80 40 360 64 32 32
- Correct! - Correct!

Requirement 5: Compensation expense 40 Paid-in capital - stock options No deferred tax asset is recorded because an incentive plan does not provide the employer a tax deduction. Requirement 6: Cash Paid-in capital -stock options Common stock (40 million shares at $1 par per share)

40

- Correct!

320 80 40

Paid-in capital - excess of par No tax effect because an incentive plan does not provide the employer a tax deduction.

360

- Correct!

Given Data P19-06: WALTERS AUDIO VISUAL, INC. $1 par common share options granted Exercise price Fair value Income tax rate 40,000,000 shares 8.00 per share 2.00 per option 40%

$ $

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 19-10 RENN-DEVER CORPORATION Earnings (Net Loss) per Share 2009 Net Loss Shares Net Loss Per Share 2010 Net Income Shares at Jan. 1 Retired Shares Earnings Per Share 2011 Net Income Shares at Jan. 1 Stock Dividend Adjustment Earnings Per Share

(160,500) 1,855,000 $ (0.09)

Correct!

$ 2,240,900 1,855,000 27,500 $ 1.23

Correct!

$ 3,308,700 1,745,000 1.02 $ 1.86

Correct!

Given Data P19-10: RENN-DEVER CORPORATION Statements of Retained Earnings For the Years ended December 31, Balance at beginning of year Net income (loss) Deductions: Stock dividend (34,900) shares Common shares retired, 9/30, (110,000 shares) Common stock dividends Balance at end of year 2011 $ 6,794,292 3,308,700 242,000 889,950 $ 8,971,042 212,660 698,000 $ 6,794,292 5,464,052 2010 $ 5,464,052 2,240,900 2009 5,624,552 (160,500)

At December 31, 2008, paid-in capital consisted of the following: Common stock, 1,855,000 shares at $1 par $ 1,855,000 Paid-in capital - excess of par $ 7,420,000

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 19-11 LOCK INTERTECHNOLOGY CORPORATION Earning Per Share ($ in millions, except per share amounts) 209 Net Income Preferred Dividends Shares at Jan. 1 New Shares Earnings Per Share 2010 Net Income Preferred Dividends Shares at Jan. 1 Retired Shares Stock Split Adjustment Earnings Per Share 2011 Net Income Preferred Dividends Shares at Jan. 1 Stock Dividend Adjustment New Shares Earnings Per Share

$ $

290 1.00 55 4.50 4.86

Correct!

$ $

380 1.00 64 3.00 1.50 4.14

Correct!

$ $

412 2.00 90 1.10 1.00 4.10

Correct!

Given Data P19-11: LOCK INTERTECHNOLOGY CORPORATION Statements of Shareholders' Equity For the Years Ended December 31, 2009, 2010, and 2011 ($ in millions)

Preferred Stock, $10 par Balance at Jan. 1, 2009 Sale of preferred shares Sale of common shares, 7/1 Cash dividend, preferred Cash dividend, common Net income Balance at Dec. 31, 2009 Retirement of common shares, 4/1 Cash dividend, preferred Cash dividend, common 3-for-2 split, 8/12 Net income Balance at Dec. 31, 2010 10% common stock dividend, 5/1 Sale of common shares, 9/1 Cash dividend, preferred Cash dividend, common Net income Balance at Dec. 31, 2011 10

Common Stock, $1 par 55 9

Additional Paid-in Capital 495 470 81

Retained Earnings 1,878

10

64 (4)

1,046 (36)

(1) (16) 290 2,151 (20) (1) (20) 380 2,490 (99) (2) (22) 412 2,779

30 10 90 9 3

(30) 980 90 31

10

102

1,101

ERTECHNOLOGY CORPORATION ments of Shareholders' Equity ded December 31, 2009, 2010, and 2011 ($ in millions) Total Shareholders' Equity 2,428 480 90 (1) (16) 290 3,271 (60) (1) (20) 380 3,570 34 (2) (22) 412 3,992

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 19-13 DOW STEEL CORPORATION Earnings Per Share (amounts in thousands, except per share amount) Basic EPS Net Income Preferred Dividends Shares at Jan. 1 New Shares Shares Retired Stock Dividend Adjustment Earnings Per Share Diluted EPS Net Income Preferred Dividends Shares at Jan. 1 New Shares Shares Retired Stock Dividend Adjustment Exercise of Options Earnings Per Share

$ $

2,100 75 600 50 1 1.04 3.00

Correct!

$ $ $ $

2,100 75 600 50 1 1.04 2 2.99

Correct!

Given Data P19-13: DOW STEEL CORPORATION Common stock, 12/31/10 Preferred stock, 12/31/10 Common stock dividends paid, 12/15/11 Preferred stock dividends paid, 12/15/11 Common shares sold, 2/28/11 Shares retired, 7/1/11 Net income, 12/31/11 Income tax rate Options grated and common share prices: Date granted December 31, 2009 December 31, 2010 December 31, 2011 Average common stock market price, 2011 Options granted Share price 8,000 $24 3,000 $33 6,500 $32 $32 600,000 shares 300,000 shares $ 400,000 $ 75,000 60,000 2,000 $ 2,100,000 40%