P12 STATEMENT OF STOCKHOLDERS' EQUITY (STOCKEQ)

LEARNING OBJECTIVES Analyze equity transactions and prepare statements of stockholders equity. Prepare the stockholders equity section of the balance sheet. Alter the worksheet to include additional stockholders equity accounts. Create a column chart showing year-end stockholders equity account balances.

PROBLEM DATA Chen Corporation began 2012 with the following stockholders equity balances: Preferred stock, $100 par value, 8% cumulative $ 10,000 Common stock, $2 par value 80,000 Additional paid-in capital 54,000 Retained earnings 166,000 Less: Treasury stock (3,300 shares at cost) (26,400) Total stockholders equity $283,600 The following selected transactions and events occurred during the year: a. Issued 10,000 shares of common stock for $60,000. b. Purchased 1,200 shares of treasury stock for $4,800. c. Sold 2,000 shares of treasury stock for $11,000. d. Generated net income of $94,000. e. Declared and paid the full years dividend on preferred stock and a dividend of $1.00 per share on common stock outstanding at the end of the year. Chen Corporation maintains several paid-in capital accounts (Paid-in Capital in Excess of Par, Paid-in Capital from Treasury Stock, etc.) in its ledger, but combines them all as "Additional paid-in capital" when preparing financial statements.

REQUIREMENT 1. You have been asked to prepare a statement of stockholders equity for Chen Corporation. Review the worksheet STOCKEQ that follows these requirements. 2. Open the file STOCKEQ from the website for this book at cengagebrain.com. Enter the formulas in the appropriate cells on the worksheet. Then fill in the columns to show the effect of each of the selected transactions and events listed earlier. Enter your name in cell A1. Save the completed worksheet as STOCKEQ2. Print the worksheet. Also print your formulas. Check figure: Total stockholders' equity balance at 12/31/12 (cell G21), $398,800.

3. In the space provided below, prepare the stockholders equity section of Chen Corporations balance sheet as of December 31, 2012. Use proper headings and provide full disclosure of all appropriate information. Chens corporate charter authorizes the issuance of 1,000 shares of preferred stock and 100,000 shares of common stock.

WHAT-IF ANALYSIS 4. The following selected transactions and events occurred during 2013: a. Issued 200 shares of preferred stock for $20,000. b. Sold 800 shares of treasury stock for $2,800. c. Declared and issued a 4% common stock dividend. The market value on the date of declaration was $5 per share. d. Generated a net loss for the year of $16,000. e. Declared and paid the full years dividend on all the preferred stock and a dividend of $15 per share on common stock outstanding at the end of the year. Enter beginning balances for 2013 on STOCKEQ2. Then erase all 2012 entries and enter the transactions for 2013. Save the results as STOCKEQ4. Print the results. CHART ANALYSIS 5. Click the Chart sheet tab. The stacked bar chart shows Chens equity account balances at December 31, 2013. Match the stacked bars (A-G) that best describe what will happen to the equity accounts if the following transactions and events occur in 2014.

Letters may be repeated or not used.

Consider each case independently.

Stacked Bar Letter

a. Reports net income ________

b. Declares cash dividend________

c. Issues additional stock ________

d. Retires stock ________

e. Splits stock 3 for 2 ________

f. Pays cash dividend ________

g. Declares small stock dividend ________

When the assignment is complete, close the file without saving it again.

TICKLERS Worksheet.

Suppose that the $54,000 "Additional paid-in capital" balance at December 31, 2011, comes from two ledger accounts: $42,000 from Paid-in capital in excess of par and $12,000 from Paid-in capital from treasury stock transactions. Revise the STOCKEQ2 worksheet to show a column for each of these accounts instead of the single column for Additional paid-in capital. Then redo the 2012 transactions using the new columns. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the file as STOCKEQT.

Chart. Using the STOCKEQ4 file, prepare a column chart showing the dollar amount of each of the stockholders equity account balances at December 31, 2013. Treasury stock can be shown as a negative value. Enter your name somewhere on the chart. Save the file again as STOCKEQ4. Print the chart.

STOCKEQ
Statement of Stockholder's Equity
Chen Corporation
Statement of Stockholders' Equity
For the Year Ended December 31, 2012
	Preferred	Common
	Stock	Stock	Add'l
	$100 Par	$2 Par	Paid-in	Retained	Treasury
	Value	Value	Capital	Earnings	Stock	Total
Balance, 12/31/11	$10,000	$80,000	$54,000	$166,000	($26,400)	$283,600
Common stock issued						FORM2
Treasury stock bought						0
Treasury stock sold						0
Net income						0
Dividends declared:
Preferred						0
Common						0
Balance, 12/31/12	FORM1	$0	$0	$0	$0	$0