The following items were shown on the balance sheet of Herman Corporation on

December 31, 2018:

Stockholders' Equity

Paid-In Capital

Capital Stock

Common stock, $15 par value, 500,000 shares

authorized; ________ shares issued and 185,000

outstanding ............................................................................... $3,000,000

Additional paid-in capital

In excess of par value ..............................................................500,000

Total paid in capital ...............................................................3,500,000

Retained Earnings ..........................................................................800,000

Total paid-in capital and retained earnings ........................4,300,000

Less: Treasury stock (20,000 shares) ............................................(300,000)

Total stockholders' equity ....................................................4,000,000

INSTRUCTIONS

Complete the following statements and show your computations.

(a) The number of shares of common stock issued was

Capital stock value/ par value per share = 3M/15 = $200,000 common shares

(b) The number of shares of treasury stock was 20,000

20,000*15

(c) The cost per share of the treasury stock was $15

300,000/20,000= 15

(d) The average issue price of the common stock was $17.5

3,500,000/200,000= $17.5

(e)Assuming that 20% of the treasury stock is sold at $40 per share, the balance in the Treasury Stock account would be $240,000

16,000 * $15 = $240,000

ABC Corporation's stockholders' equity section at December 31, 2017 appears below:

Stockholders' equity

Paid-in capital

Common stock, $15 par, 50,000 outstanding$ 750,000

Paid-in capital in excess of par150,000

Total paid-in capital$ 900,000

Retained earnings200,000

Total stockholders' equity$ 1,100,000

On June 30, 2018, the board of directors of ABC Corporation declared a 10% stock dividend, payable on July 31, 2018, to stockholders of record on July 15, 2018. The fair market value of ABC Corporation's stock on June 30, 2018, was $20.

On December 1, 2018, the board of directors declared a 3 for 1 stock split effective

December 15, 2018. ABC Corporation's stock was selling for $25 on December 1, 2018, before the stock split was declared. Par value of the stock was adjusted. Net income for 2018 was $500,000 and there were $100,000 cash dividends declared.

INSTRUCTIONS

(a) Fill in the amount that would appear in the stockholders' equity section for ABC

Corporation at December 31, 2016, for the following items:

1. Common stock$ __________________

2. Number of shares outstanding$ __________________

3. Par value per share$ __________________

4. Paid-in capital in excess of par$ __________________

5. Retained earnings$ __________________

6. Total stockholders' equity$ __________________

5. Derek Corporation was organized on January 1, 2013. During its first year, the corporation issued

30,000 shares of $5 shares par value preferred stock and 200,000 shares of $1 par value common

stock. At December 31, the company declared the following cash dividends:

2013$4,000

2014$8,000

2015$16,000

2016$32,000

INSTRUCTIONS

a) Show the allocation of dividends to each class of stock, assuming the preferred

stock dividend is 5% and not cumulative.

b)Show the allocation of dividends to each class of stock, assuming the preferred

stock dividend is 7% and cumulative.

c)Journalize the declaration of the cash dividend at December 31, 2016 using the

assumption of part (b).

7. Elston Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. During 2018, its first year of operation, the company has the following stock transactions.

Jan.15Issued 500,000 shares of stock at $6 per share.

Jan.30Attorneys for the company accepted 500 share of common stock as payment for

legal services rendered in helping the company incorporate. The legal services are estimated to have a value of $4,000.

July2Issued 100,000 shares of stock for land. The land had an asking price of

$900,000. The stock is currently selling on a national exchange at $7 per share.

Sept. 5Purchased 10,000 shares of common stock for the treasury at $10 per share.

Dec.6Sold 3,000 shares of the treasury stock at $12 per share.

Dec15Sold 4,000 shares of the treasury stock at $7 per share.

INSTRUCTIONS

Journalize the transactions for Elson Corporation.

6. During 2018, Pine Corporation had the following transactions and events:

1. Issued par value preferred stock for cash above par value.

2. Issued par value common stock for cash at an amount greater than par value.

3. Completed a 5 for 1 stock split.

4. Declared a Large stock dividend when the market value was higher than the par

value.

5. Declared a cash dividend.

6. Made a prior period adjustment for overstatement of net income.

7. Issued par value common stock for cash at par value.

8. Paid the cash dividend.

9. Issued the shares of common stock required by the stock dividend declaration in

4. above.

INSTRUCTIONS

Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answers in tabular form with the following columns. Use (I) for increase, (D) for decrease, and (NE) for no effect.

Paidin Capital

Item

CapitalStock

Additional

Painin Capital

Retained

Earnings

1.

2.

3.

4.

5.

6.

7.

8.

9.

The following accounts appear in the ledger of Norland Inc. after the books are closed at

December 31, 2018.

Common Stock, $1 par value, 200,000, shares authorized, 100,000 shares

issued$100,000

Common Stock Dividends Distributable75,000

Paidin Capital in Excess of Par ValueCommon Stock300,000

Preferred Stock, $100 par value, 8%, 5,000 shares authorized; 1,000 shares

issued100,000

Retained Earnings700,000

Treasury Stock (5,000 common shares)42,500

Paidin Capital in Excess of Par ValuePreferred Stock250,000

INSTRUCTIONS

Prepare the stockholders' equity section at December 31, 2018.