PROBLEMSETC

PROBLEM131C
Gobo Logos is incorporated at the beginning of this year and engages in a number of
transactions.Thefollowingjournalentriesimpacteditsstockholdersequityduringitsfirstyear
ofoperations:
a.
Cash
195,000
CommonStock,$20ParValue
150,000
ContributedCapitalinExcessof
ParValue,CommonStock
45,000
b.

Patent
CommonStock,$20ParValue
ContributedCapitalinExcessof
ParValue,CommonStock
c.

52,000
40,000
12,000

Cash
Land
Building
MortgagePayable
CommonStock,$20ParValue
ContributedCapitalinExcessof
ParValue,CommonStock

21,000
85,000
160,000

d.

140,000

Cash
CommonStock,$20ParValue
ContributedCapitalinExcessof
ParValue,CommonStock

70,000
140,000
56,000

100,000
40,000

Required
1.Explaineachjournalentryathroughd.
2.Howmanysharesofcommonstockareoutstandingatyearend?
3.Whatistheamountofminimumlegalcapital(basedonparvalue)atyearend?
4.Whatisthetotalcontributedcapitalatyearend?
5.Whatisthebookvaluepershareofthecommonstockatyearendifcontributedcapitalplus
retainedearningsequals$767,550?

PROBLEM132C
SVCCorporationreportsthefollowingcomponentsofstockholdersequityonDecember31,
2008:
Commonstock$10parvalue,50,000sharesauthorized,
30,000sharesissuedandoutstanding$300,000
Contributedcapitalinexcessofparvalue,commonstock140,000
Retainedearnings330,000
Totalstockholdersequity
$770,000
Inyear2009,thefollowingtransactionsaffecteditsstockholdersequityaccounts:
Jan. 2 Purchased2,500sharesofitsownstockat$16pershare.
Jan. 9 Directorsdeclareda$5.00persharecashdividendpayableonFeb.15totheFeb.5
stockholdersofrecord.
Feb.15 PaidthedividenddeclaredonJanuary9.
July16 Sold1,000ofthetreasurysharesat$20pershare.
Aug.12 Sold1,500ofthetreasurysharesat$12pershare.
Sept.4 Directors declared a $5.00 per share cash dividend payable on October 18 to the
September25stockholdersofrecord.
Oct.18 PaidthedividenddeclaredonSeptember4.
Dec.31 Closedthe$128,000creditbalance(fromnetincome)intheIncomeSummaryaccount
toRetainedEarnings.
Required
1.Preparejournalentriestorecordthetransactionsandclosingsfor2009.
2.PrepareastatementofretainedearningsfortheyearendedDecember31,2009.
3.PreparethestockholdersequitysectionofthecompanysbalancesheetasofDecember31,
2009.

PROBLEM133C
AtMarch30,theendofRamosCompanysfirstquarter,thefollowingstockholdersequity
accountsappear:
Commonstock,$10parvalue
$300,000
Contributedcapitalinexcessofparvalue,commonstock150,000
Retainedearnings
840,000
Inthesecondquarter,thefollowingentriesrelatedtoitsequityaccountsarerecorded:

April2

RetainedEarnings
CommonDividendPayable

180,000
180,000

April25

CommonDividendPayable
180,000
Cash
180,000
April30
RetainedEarnings
84,000
CommonStockDividendDistributable
60,000
ContributedCapitalinExcessof
ParValue,CommonStock
24,000
May5

CommonStockDividendDistributable60,000
CommonStock,$10ParValue

June1

MemoChangethetitleofthecommon
stockaccounttoreflectthenewparvalueof$5.

June30

IncomeSummary
RetainedEarnings

60,000

202,000
202,000

Required
1.Explaineachjournalentry.
2.Completethefollowingtableshowingthebalancesofthecompanysequityaccountsateach
indicateddate:
April2April25April30May5June1June30
Commonstock
$_____$_____$_____$_____$_____
Commonstockdividend
distributable
_________________________
Contributedcapitalin
excessofpar
_______________ __________
Retainedearnings
_________________________
Combinedbalancesof
equityaccounts
$_____$_____$_____$_____$_____

PROBLEM134C
TheequitysectionsfromJeffordGroups2008and2009balancesheetsfollow:

$_____
_____
_____
_____
$_____

StockholdersEquity(December31,2008)
Commonstock$4parvalue,100,000shares
authorized,40,000sharesissuedandoutstanding
$160,000
Contributedcapitalinexcessofparvalue,commonstock
120,000
Totalcontributedcapital
$280,000
Retainedearnings
320,000
Totalstockholdersequity
$600,000

StockholdersEquity(December31,2009)
Commonstock$4parvalue,100,000shares
authorized,47,400sharesissued,3,000inthetreasury
$189,600
Contributedcapitalinexcessofparvalue,commonstock
179,200
Totalcontributedcapital
$368,800
Retainedearnings($30,000restricted)
400,000
$768,800
Lesscostoftreasurystock
(30,000)
Totalstockholdersequity
$738,800
Thefollowingtransactionsandeventsaffectitsequityaccountsduringyear2009:
Jan. 5 Declareda$0.40persharecashdividend,dateofrecordJanuary10.
Mar.20 Purchasedtreasurystock.
Apr. 5 Declareda$0.40persharecashdividend,dateofrecordApril10.
July 5 Declareda$0.40persharecashdividend,dateofrecordJuly10.
July31 Declareda10%stockdividendwhenthestocksmarketvalueis$14pershare.
Aug.14 Issuedstockdividend.
Oct. 5 Declareda$0.40persharecashdividend,dateofrecordOctober10.
Required
1.Howmanycommonsharesareoutstandingoneachcashdividenddate?
2.Whatisthedollaramountforeachofthefourcashdividends?
3.Whatistheamountofthecapitalizationofretainedearningsforthestockdividend?
4.Whatisthepersharecostofthetreasurystockpurchased?
5.Howmuchnetincomedidthecompanyearnduringyear2009?

PROBLEM135C

SafinCorporationscommonstockiscurrentlysellingonastockexchangeat$54pershare,and
itscurrentbalancesheetshowsthefollowingstockholdersequitysection:
Preferredstock,7%cumulative$___parvalue,500shares
authorized,issued,andoutstanding

$40,000
Commonstock,$___parvalue,6,000sharesauthorized,issued,
andoutstanding
96,000
Retainedearnings
232,000
Totalstockholdersequity
$368,000
Required
1.Whatisthecurrentmarketvalue(price)ofthiscorporationscommonstock?
2.Whataretheparvaluesofthecorporationspreferredstockanditscommonstock?
3.Ifnodividendsareinarrears,whatarethebookvaluespershareofthepreferredstockandthe
commonstock?
4.Iftwoyearspreferreddividendsareinarrears,whatarethebookvaluespershareofthe
preferredstockandthecommonstock?
5.Iftwoyearspreferreddividendsareinarrearsandthepreferredstockiscallableat$90per
share,whatarethebookvaluespershareofthepreferredstockandthecommonstock?
6.Iftwoyearspreferreddividendsareinarrearsandtheboardofdirectorsdeclaresdividendsof
$16,000,whattotalamountwillbepaidtothepreferredandtothecommonshareholders?What
istheamountofdividendspershareforthecommonstock?
AnalysisComponent
7.Whataresomefactorsthatcancontributetoadifferencebetweenthebookvalueofcommon
stockanditsmarketvalue(price)?