Case 2 Wiebold, Incorporated The following note related to stockholders equity was reported in Wiebold, Inc.s annual report.

Instructions On February 1, the Board of Directors declared a 3-for-2 stock split, distributed on February 22 to share- holders of record on February 10. Accordingly, all numbers of common shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this stock split.

On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.80 in the current year and $0.75 in the prior year.

(a)What is the significance of the date of record and the date of distribution?

(b)Why might Wiebold have declared a 3-for-2 for stock split?

(c)What impact does Wiebolds stock split have on (1) total stockholders equity, (2) total par value, (3) outstanding shares, and (4) book value per share? Accounting,

Analysis, and Principles

On January 1, 2014, Agassi Corporation had the following stockholders equity accounts.

Common Stock ($10 par value, 60,000 shares issued and outstanding). $600,000

Paid-in Capital in Excess of ParCommon Stock 500,000

Retained Earnings620,000

During 2014, the following transactions occurred.

Jan. 15 Declared and paid a $1.05 cash dividend per share to stockholders.

Apr. 15 Declared and paid a 10% stock dividend. The market price of the stock was $14 per share.

May 15 Reacquired 2,000 common shares at a market price of $15 per share.

Nov. 15 Reissued 1,000 shares held in treasury at a price of $18 per share.

Dec. 31 Determined that net income for the year was $370,000.

Accounting

Journalize the above transactions. (Include entries to close net income to Retained Earnings.) Determine the ending balances for Paid-in Capital, Retained Earnings, and Stockholders Equity.

Analysis

Calculate the payout ratio and the return on common stock equity.

Principles R. Federer is examining Agassis financial statements and wonders whether the gains or losses on Agassis treasury stock transactions should be included in income for the year. Briefly explain whether, and the conceptual reasons why, gains or losses on treasury stock transactions should be recorded in income.