P4. Kraft Unlimited, Inc., was organized and authorized to issue 5,000 shares of $100 par value, 9 percent preferred stock and 50,000 shares of no par, $5 stated value com- mon stock on July 1, 2014. Stock-related transactions for Kraft Unlimited follow.

Sept. 15 25

Oct. 30

Dec. 15

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Date of record for cash dividends. Paid cash dividends to stockholders of record on September 15.

Issued 4,000 shares of com- mon stock for a piece of land. The stock was selling for $3 per share, and the land had a fair market value of $12,000. Issued 2,200 shares of pre- ferred stock for $50 per share.

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1. For each of these transactions, indicate the account numbers and dollar amounts (as shown in the example) for the account(s) debited and credited, using the account numbers that follow.

110 Cash 120 Land 121 Building 220 Dividends Payable 305 Preferred Stock 310 Common Stock

312 Additional Paid-in Capital 313 Paid-in Capital, Treasury Stock 340 Retained Earnings 341 Dividends 350 Treasury Stock, Common 510 Start-up and Organization Costs

July 1 1

2 10

Aug. 2 10

12 22

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1. Prepare journal entries to record these transactions.

2. Prepare the stockholders equity section of Krafts balance sheet as it would appear

on August 31, 2014. Net income for July was zero and August was $11,500.

3. Business appliCation Calculate dividend yield, price/earnings ratio, and return on equity. Assume earnings per common share are $1.00 and market price per common share is $20. For beginning stockholders equity, use the balance after

the July transactions. (Round to the nearest tenth of a percent.)