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6/1/15

Prof- Helen Schwalb


Accounting 102
6/15/15- Monday
Final Not
HW

Multiple Choice
Midterm 40%
Cumulative 45%
Participation 15%

Problem B- Prof. does


Problem A-Problem HW
Chapter-11

Treasury Stock
EPS- Net Income
Shares of Stock = $1,000,000/10,000
= 100
Buy Back own stock = repurchase of company stock. Value at cost
net at par value.
(Dr.)
(Cr.)

Treasury Stock
Cash

xxxx
xxxx

1000 share stock with a par value of -----------$5 per share was required at a cost of $10 par share
1000 shares of stock
Common Stock
Preferred Stock
Additional Paid in Capital
Retained Earnings
-

Stockholder Equity
Treasury Stock
Total Stockholder equity

2. Cash
XXX
Treasury Stock
XXX
Additional Paid in capital- TS XXX

((difference) = resale of treasury stock at a price higher than original


cost.)
3. Cash
XXX
Additional Paid in Capital XXX
Retained Earnings
XXX
(Losing money in company)
Resale of at is price lower than the original cost.
Ex 11-9:
Feb 10 (a) Treasury Stock
Cash

425,000
425,000

Purchase of 17000 shares at $25/share


Refunded =17,000
Refunded =10,000
---------------------------------------7000x 25 = 175,000
June 4

(b)

Cash
(6000x 33)
Treasury Stock
(6000x 25)
Additional PIC-TS

198,000
150,000
48,000

Additional PIC-TS
----------------------------------------12,000
48,000

Dec 22

(c)
Cash
88,000
Additional PIC-TS
12,000
Treasury Stock
100,000
(4000x 25)

Exercise 11-13

Par Value
Additional PIC

1.

Cash
6,600,000
(550,000sh x $12)
Common Stock
5,500,000
(5,500,000 x $10 par value)
Additional PIC-CS
1,100,000
Sale of Common Stock

2.

Cash
4,400,000
(40,000 x 10)
Preferred Stock
4,000,000
Additional PIC-Preferred Stock
400,000
Sale of Preferred Stock

3.

Treasury Stock
Cash

575,000
575,000

Purchase of Treasury Stock ($25,000 x $23/sh)


Stockholder Equity
_______________________________________
Preferred Stock, 6%, $100 PV, 60,000 shares, authorized,
40,000 shares & issued + outstanding
4,000,000
(40,000 x 100)
Common Stock, $10 PV, 1,200,000 shares, authorized,
550,000 shares issued
(550,000 x 10)
5,500,000
Additional PIC
____________________
Preferred Stock
400,000
Common Stock
1,100,000

__________________________________________
______________
Total Paid in Capital
11,000,000
Less: Treasury Stock
575,000
( not asset its a debit
________________________________________________________________
Total Stockholder Equity
10,425,000
account contra asset)
Ex 11-14
1.

Cash
1,800,000
(100,000 x 18)
Common Stock
10,000,000
Add PIC-CS
800,000
Sale of Common Stock

2.

Treasury Stock
500,000
Cash
500,000
Purchase 25,000 shares $20/sh

3.

Cash
230,000
(10,000 x 23)
TS
Additional PIC-TS

200,000
30,000

Stockholder Equity
_________________________________________
Common stock, $10 par value, 300,000 shares
Authorized, 100,000 issued
10,000,000
(100,000 x 10)
Additional PIC
_________________
Additional PIC- Common Stock
800,000
Additional PIC-TS
30,000

________________________________________________
Total PIC
1,830,000
Retained Earnings
120,000
________________________________________________
Total PIC & Retained Earnings
1,950,000
Less: Treasury Stock ***
300,000
(500,000 200,000)
________________________________________________________________
Total Stockholder equity
1,650,000
* Treasury Stock
_________________________________
500,000

200,000

300,000
***
25000 shares 10,000 shares
= 15000 share x 20
= 300,000
Problem 11-2B
1.

Cash
Preferred Stock

100,000
100,000

Sale of Preferred Stock


2.

Cash

6,000,000
Common Stock
Add PIC-CS

Sale of Common Stock

400,000
5,600,000

Stockholder Equity
10% cumulative preferred stock, $100 par value
authorized issued & outstanding 10,000 shares
1,000,000
Common Stock, $1 par value, authorized
1,000,000 shares issued & outstanding
400,000
400,000
Additional paid in capital- Common Stock
5,600,000
Total paid in capital
7,750,000
Retained Earnings
750,000
Total Stockholder Equity
7,750,000
Net income - Increase R/E
Net loss
- Decrease R/E
Dividends - Decrease R/E
Computation of Retained Earnings
_____________________________________________________________________
Net income for 5 years
$ 4,100,000
Less: dividends
Preferred stock
(shares)(par value)(interest rate)
5( (10,000) (100) (.10))
Common Stock
5((400,000)(1)(.80))
Retained Earnings
Less: Net loss: 2015
Retained Earnings 12/31/15

500,000
1,600,000
2,000,000
4,250,000
750,000

(b) 100,000 of preferred dividends in arrears for 2015


(preferred= 10,000 x 100 x .10)
(c) Dividends are not a liability where as declared by the board of
directors.

Class- 2
6/02/2015
Chapter-12
Malox DC, Inc
Income Statement
For the year ended 12/31/15
Net Sales
Cost of Goods Sold
Gross Margin

9,000,000
4,000,000
----------------------------5,000,000

Operating Expenses:
Sell up expenses
General + Admin Expenses

1,500,000
920,000

Less: Enlargement Settlement


80,000
Income Taxes
750,000
-----------------------------3,250,000
Income from Continued Operations
Discontinued Operations
175,000 *
Extraordinary items
(52,500)**
* Discontinued Operations
1.
Loss on operations (net of taxes)
105,000
Loss on operations
Less: Tax benefit
(150,000 x .30)
2.

Loss on Disposal (net of taxes)


(70,000)
Less on disposal
Less: tax benefit
(100,000 x .30)

1,750,000

(150,000)
(45,000)

(100,000)
(30,000)
------------------------

-( 175,000)
Net Income
1, 522,500
EPS- Earnings per share = net income preferred dividends
________________________________________
Weighted average Common Shares (not
responsible)
WTD average shares
.............................................................................................
156,250 shares
(If not preferred dividend, dont need to worry)
Extraordinary Items
**
(1)Material on Amount
(2)Unusual
(3)Not expected to recur in the future

Extraordinary Loss
Less: Tax Benefit
(30% of 75,000)

(75,000)
22,500

------------------------------------------------------Net Extraordinary Loss


(52,500) **
EPS
11.2

...................................................
= 11.2

175,000/ 156,250

1.12

....................................................
= 1.12

175,000/156,250

.34
9.74

....................................................
= .34
...................................................
= 9.74

52,500/156,250

1,522,500/156,250

Exercise 12-3 (p-547)


Sports + Inc.
Income Statement
For the year ended 12/31/2015
Net Sales
.........................................................
12,500,000
Costs + Expenses.........................................................
8,600,000
(1)Income from continued operations ............................
3,900,000
(2) Discontinued Operations
............................
540,000
Net Income .......................................................................
3,360,000
Discontinued Operations:
(1)Loss on Operations (net of taxes)
192,000

.................................

(2) Loss on disposal (net of taxes)


348,000
EPS

540,000
Net Income - Preferred Dividends

21.43
.............
operations)
2.97

.................................

...............

Wtd average common shares


3,900,000 (Income from continued
182,000
540,000 (Discontinued Operations)
182,000

(-)

3,360,000 (Net Income)

18.46

182,000

(b) Most useful of EPS 3,900,000 income from continued operations


because it is reflection of income.
Exercise 12.5
(1)
(2)

EPS =
EPS =
Net Income = 1,920,000

(1) Total Shares


400,000
(2) Total Shares
100,000
Preferred Stock = 100,000 x 100 x .8 = 800,000
Common Stock = 300,000 x 5
= 1,500,000
(1)

EPS = 1,920,000- 0
400,000

= 4.8

Preferred Dividends = (par value) (shares) (interest rate)


= (100) (100,000) (.08)
(2) EPS = 1,920,000 - 800,000 = 3.73
300,000
(always shares of common; not preferred)
Cash Dividends:
Involve different period of time.

(1) Date of declaration


(when board of director declared dividends)
Dr.
Cr.

Retained Earnings
Dividends Payable

500,000
500,000

(2) Ex-dividend date


No Journal Entry
Occur 3 days before date of payment
(3) Date of Record
No Journal Entry
All people who are recorded. All clerical work done.
(4) Date of Payment
Dr.
Cr.

Dividend payable
Cash

500,000
500,000

Stock Dividends
Small stock dividends less than 20% ( < 20%)
Use market value to calculate deductions from retained
earnings.
On June 1 Aspen Co. has 1,000,000 shares of $1 par value stock with a
market value of $25/share, the company declared a 5% stock
dividends.
1,000,000
x
.05
50,000 will receive extra shares
x 25
(market value par value)
1,250,000
Date of Declaration:
Dr.
Cr.

Retained Earnings
Stock dividends to be distributed

1,250,000