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    The document describes various scenarios involving preferred stock and dividends for Weisberg Corporation. (a) If the preferred stock is cumulative, $180,000 in dividends in arrears from 2009-2012 should be disclosed in a note to stockholders' equity, not as a liability. (b) If 3,000 shares of preferred stock are converted to common stock, an entry is required to reduce preferred stock by $300,000 and increase common stock by $210,000 and paid-in capital by $90,000. (c) If the preferred stock was issued at $107 per share, the stockholders' equity section should report paid-in capital of $1,

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    E15

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    The document describes various scenarios involving preferred stock and dividends for Weisberg Corporation. (a) If the preferred stock is cumulative, $180,000 in dividends in arrears from 2009-2012 should be disclosed in a note to stockholders' equity, not as a liability. (b) If 3,000 shares of preferred stock are converted to common stock, an entry is required to reduce preferred stock by $300,000 and increase common stock by $210,000 and paid-in capital by $90,000. (c) If the preferred stock was issued at $107 per share, the stockholders' equity section should report paid-in capital of $1,

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    12 views2 pages

    This Study Resource Was

    Uploaded by

    Happy Michael
    The document describes various scenarios involving preferred stock and dividends for Weisberg Corporation. (a) If the preferred stock is cumulative, $180,000 in dividends in arrears from 2009-2012 should be disclosed in a note to stockholders' equity, not as a liability. (b) If 3,000 shares of preferred stock are converted to common stock, an entry is required to reduce preferred stock by $300,000 and increase common stock by $210,000 and paid-in capital by $90,000. (c) If the preferred stock was issued at $107 per share, the stockholders' equity section should report paid-in capital of $1,

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    of 2

    E15-8 (Preferred Stock Entries and Dividends) Weisberg Corporation has 10,000 shares of

    $100 par value, 6% preferred stock and 50,000 shares of $10 par value common stock
    outstanding at December 31, 2012.

    Instructions

    Answer the questions in each of the following independent situations.

    (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on
    December 31, 2009, what are the dividends in arrears that should be reported on the December
    31, 2012, balance sheet? How should these dividends be reported?

    (b) If the preferred stock is convertible into seven shares of $10 par value common stock and
    3,000 shares are converted, what entry is required for the conversion assuming the preferred
    stock was issued at par value?

    (c) If the preferred stock was issued at $107 per share, how should the preferred stock be

    m
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    reported in the stockholders’ equity section?

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    EXERCISE 15-8 (15–20 minutes)
    rs e
    (a) $1,000,000 X 6% = $60,000; $60,000 X 3 = $180,000. The cumulative
    ou urc
    dividend is disclosed in a note to the stockholders’ equity section; it
    is
    o

    not reported as a liability.


    aC s

    (b) Preferred Stock (3,000 X $100)................................... 300,000


    vi y re

    Common Stock (3,000 X 7 X $10) ....................... 210,000


    Paid-in Capital in Excess of Par Value—
    Common Stock................................................ 90,000
    ed d

    (c) Paid-in capital


    ar stu

    Preferred stock, $100 par 6%,


    10,000 shares issued ...................................... $1,000,000
    Paid-in capital in excess of par (10,000 X $7).... 70,000
    is
    Th

    E15-15 (Dividend Entries) The following data were taken from the balance sheet accounts of
    Wickham Corporation on December 31, 2012.
    sh

    Current assets $540,000


    Debt investments 624,000
    Common stock (par value $10) 600,000
    Paid-in capital in excess of par—common stock 150,000
    Retained earnings 840,000
    Instructions

    This study source was downloaded by 100000807821156 from CourseHero.com on 04-14-2021 14:21:26 GMT -05:00

    https://www.coursehero.com/file/7684768/E15/
    Prepare the required journal entries for the following unrelated items.

    (a) A 5% stock dividend is declared and distributed at a time when the market price is $39 per
    share.

    (b) The par value of the capital stock is reduced to $2 with a 5-for-1 stock split.

    (c) A dividend is declared January 5, 2013, and paid January 25, 2013, in bonds held as an
    investment. The bonds have a book value of $90,000 and a fair value of $125,000.

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    er as
    co
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    rs e
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    aC s
    vi y re
    ed d
    ar stu
    is
    Th
    sh

    This study source was downloaded by 100000807821156 from CourseHero.com on 04-14-2021 14:21:26 GMT -05:00

    https://www.coursehero.com/file/7684768/E15/
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