Chapter 12

Please Note:

These templates contain formulas that, when the correct data is entered
into the correct cells, will help solve the problems. Formulas will appear
as a long dash with or without a dollar sign, or as "#DIV/0!" or "#REF!" or
"#VALUE". As data is entered, formulas will become numbers. Data
numbers should be entered without dollar signs or commas.

To determine which cells are involved in a formula, simply highlight the

cell containing the formula, and the formula will be displayed in the
Formula Bar. By placing the cursor into the Formula Bar and clicking
once, the cells in question will be highlighted and color-coded to match
the formula. Exit the formula by pressing the Escape key. Use this method
whenever the position of data cells is not obvious on the spreadsheet.

Hint: When footnotes contain calculations, enter data into the footnote cells
first, before entering data elsewhere.
Chapter 12, P 1.

1. Journal entries prepared

Sept. 1 Cash —
Common Stock —
Paid-in Capital in Excess of Par Value,
Common —
Issued shares of
par value common stock for
per share

1 Start-up and Organization Expense

Cash
Attorney's fee for organizing the
corporation and obtaining the
corporate charter

Oct. 2 Cash —
Common Stock —
Paid-in Capital in Excess of Par Value,
Common —
Issued shares of
par value common stock for
per share

Nov. 30 Cash Dividends Declared —

Cash Dividends Payable —
Declaration of a $0.40 cash dividend
to common stockholders
shares x =
$—

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P1-1

 Chapter 12, P 1. (Continued)

2. Stockholders' equity section of the balance sheet prepared

Sussex Corporation
Balance Sheet
November 30, 20xx
Stockholders' Equity
Contributed Capital
Common Stock, $8 par value, 300,000 shares
authorized, 130,000 shares issued and
outstanding
Paid-in Capital in Excess of Par Value, Common —
Total Contributed Capital $ —
Retained Earnings — *
Total Stockholders' Equity $ —

*Retained earnings = – $ — = $ —

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P1-2

Chapter 12, P 2.

1. Dividends calculated for cumulative preferred and common stock

Cumulative
Preferred Stock Common Stock
Dividends Dividends Total
Per Per Dividends
Amount Share Amount Share Allocated
20x2 $ — — $— $ —
20x3
Dividends in arrears, 20x2 $—
20x3 dividends
Totals $— * $ —
20x4 $ — * $—

2. Dividends calculated for noncumulative preferred and common stock

Noncumulative
Preferred Stock Common Stock
Dividends Dividends Total
Per Per Dividends
Amount Share Amount Share Allocated
20x2 $ — — $— $ —
20x3 $ — * $ —
20x4 $ — * $—

3. The 20x3 and 20x4 dividends yield for common stock calculated

20x3 20x4
Dividends per Share
= #DIV/0! = #DIV/0!
Market Price per Share

*Rounded.

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P2-1

Chapter 12, P 3.

a. Treasury Stock, Common —

Cash —
Purchased shares of common stock
for the treasury at per share

b. Treasury Stock, Common —

Cash —
Purchased shares of common stock
for the treasury at per share

c. Cash —
Treasury Stock, Common —
Paid-in Capital, Treasury Stock —
Sold shares of treasury stock for
; originally purchased for
per share
shares x = $ —

d. Cash —
Paid-in Capital, Treasury Stock —
Treasury Stock, Common —
Sold shares of treasury stock for
; originally purchased for
per share
shares x = $ —

e. Cash —
Paid-in Capital, Treasury Stock
Retained Earnings
Treasury Stock, Common —
Sold shares of treasury stock for
; originally purchased for
per share
— shares x $ — = $ —
f. Common Stock
Paid-in Capital in Excess of Par Value, Common
Retained Earnings
Treasury Stock, Common —
Retired shares of treasury stock
purchased at per share that were originally
issued at per share

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P3-1

 Chapter 12, P 4.

1. Transactions recorded

Aug. 3 Start-up and Organization Expense —

Common Stock —
Paid-in Capital in Excess of Stated Value, Common —
Issued shares of stated
value common stock for organization
services valued at

15 Land —
Common Stock —
Paid-in Capital in Excess of Stated Value, Common —
Issued shares of stated
value common stock with a market value of
per share for land

22 Cash —
Preferred Stock —
Issued shares of par
value preferred stock at par

Oct. 4 Cash —
Common Stock —
Paid-in Capital in Excess of Stated Value, Common —
Issued shares of stated
value common stock for per share

10 Treasury Stock, Common —

Cash —
Purchased shares of common stock
for the treasury at per share
15 Cash Dividends Declared #DIV/0!
Cash Dividends Payable #DIV/0!
Declaration of preferred and common stock
cash dividends
$ — x ¸ = #DIV/0!
shares x = $ —
25 No entry required
31 Cash Dividends Payable #DIV/0!
Cash #DIV/0!
Payment of cash dividends declared on
October 15

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P4-1

Chapter 12, P 4. (Continued)

2. Stockholders' equity section of the balance sheet prepared

Kokaly Plastics Corporation

Balance Sheet
October 31, 20xx

Stockholders' Equity
Contributed Capital
Preferred Stock, $100 par value, 6%, 20,000 shares
authorized, 10,000 shares issued and outstanding
Common Stock, $2 stated value, 100,000 shares
authorized, 36,000 shares issued, and 31,000 shares
outstanding
Paid-in Capital in Excess of Stated Value, Common — —
Total Contributed Capital $ —
Retained Earnings #DIV/0! *
Total Contributed Capital and Retained Earnings #DIV/0!
Less Treasury Stock, Common (5,000 shares, at cost) —
Total Stockholders' Equity #DIV/0!

*Retained earnings = – #DIV/0! = #DIV/0!

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P4-2

 Chapter 12, P 5.

1. Transactions recorded in T accounts

Cash Land
1/19 3/22 10/30
7/15 9/25 Bal. 12,000
8/1
12/15 Preferred Stock
— — 12/15
Bal. — Bal. —

Building Paid-in Capital in Excess

2/7 of Stated Value, Common
Bal. — 1/19
1/21
Cash Dividends Payable 2/7
9/25 9/1 7/15
Bal. — 10/30
Bal. —

Common Stock Retained Earnings

1/19 Net
1/21 Income
2/7
7/15 Cash Dividends Declared
10/30 9/1
Bal. —

Paid-in Capital, Treasury Stock

8/1
Bal. —

Treasury Stock, Common

3/22 8/1
Bal. —

Start-up and Organization Expense

1/21

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P5-1

 Bal. —

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P5-1

Chapter 12, P 5. (Continued)

2. Stockholders' equity section of the balance sheet prepared

Jones Corporation
Balance Sheet
December 31, 20xx

Stockholders' Equity
Contributed Capital
Preferred Stock, $50 par value, 5% noncumulative,
50,000 shares authorized, 2,200 shares issued
and outstanding $ —
Common Stock, $1 stated value, 2,000,000 shares
authorized, 59,000 shares issued, and 51,500
shares outstanding $ —
Paid-in Capital in Excess of Stated Value, Common —
Paid-in Capital, Treasury Stock — —
Total Contributed Capital $ —
Retained Earnings — *
Total Contributed Capital and Retained Earnings $ —
Less Treasury Stock, Common (7,500 shares, at cost) —
Total Stockholders' Equity $ —

*Retained earnings = $ — – $— = $ —

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P5-2

Chapter 12, P 6.

1. Transactions recorded

Mar. 1 Cash —
Common Stock —
Paid-in Capital in Excess of Par Value, Common —
Issued shares of par value
common stock for

2 Start-up and Organization Expense

Cash
Fees for obtaining the charter and organizing
the corporation

Apr. 10 Cash —
Common Stock —
Paid-in Capital in Excess of Par Value, Common —
Issued shares of par value
common stock for per share

May 31 Cash Dividends Declared —

Cash Dividends Payable —
Declaration of a cash dividend of $.20 per
share ( shares x =
$— )

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P6-1

 Chapter 12, P 6. (Continued)

2. Stockholders' equity section of balance sheet prepared

Carmel Corporation
Balance Sheet
May 31, 20xx

Stockholders' Equity
Contributed Capital
Common Stock, $4 par value, 100,000 shares
authorized, 43,000 shares issued and
outstanding
Paid-in Capital in Excess of Par Value, Common —
Total Contributed Capital $ —
Retained Earnings — *
Total Stockholders' Equity $ —

*Retained earnings = – $ — = $ —

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P6-2

 Chapter 12, P 7.

1. Dividends calculated for cumulative preferred and common stock

Cumulative
Preferred Stock Common Stock
Dividends Dividends Total
Per Per Dividends
Amount Share Amount Share Allocated
20x1 $ — — — $ —
20x2
Dividends in arrears, 20x1
20x2 dividends
Totals $ — $ — — — $ —
20x3
Dividends in arrears, 20x2
20x3 dividends
Totals $ — $ — $ — $ — $—
20x4 $ — $ —

2. Dividends calculated for noncumulative preferred and common stock

Noncumulative
Preferred Stock Common Stock
Dividends Dividends Total
Per Per Dividends
Amount Share Amount Share Allocated
20x1 $ — — $— $ —
20x2 $ — — $—
20x3 $ — $ —
20x4 $ — $ —

3. The 20x3 and 20x4 dividends yield for common stock calculated

20x3 20x4
Dividends per Share $ — $ —
= #DIV/0! = #DIV/0!
Market Price per Share

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P7-1

 Chapter 12, P 8.

1. Transactions recorded

July 1 Cash —
Common Stock —
Paid-in Capital in Excess of Stated Value,
Common —
Issued shares of stated
value common stock at per share

1 Start-up and Organization Expense —

Common Stock —
Paid-in Capital in Excess of Stated Value,
Common —
Issued shares of stated
value common stock at per share
for services to organize the corporation
2 Cash —
Preferred Stock —
Issued shares of par
value preferred stock at par

10 Land —
Common Stock —
Paid-in Capital in Excess of Stated Value,
Common —
Issued shares of stated
value common stock with a market value of
$12 per share for land
Aug. 2 Treasury Stock, Common —
Cash —
Purchased shares of common stock
for the treasury at per share
10 Cash Dividends Declared —
Cash Dividends Payable —
Declaration of preferred and common stock
cash dividends
$ — x x 1 / 12 = $ —
shares x = $ —

12 No entry required
22 Cash Dividends Payable —
Cash —
Payment of preferred and common stock
cash dividends

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P8-1

Chapter 12, P 8. (Continued)

2. Stockholders' equity section of the balance sheet prepared

Vanowski, Inc.
Balance Sheet
August 31, 20xx

Stockholders' Equity
Contributed Capital
Preferred Stock, $100 par value, 9%, 10,000 shares
authorized, 2,000 shares issued and outstanding $ —
Common Stock, $5 stated value, 100,000 shares
authorized, 26,000 shares issued, and 23,000
shares outstanding $ —
Paid-in Capital in Excess of Stated Value, Common — —
Total Contributed Capital $ —
Retained Earnings — *
Total Contributed Capital and Retained Earnings $ —
Less Treasury Stock, Common (3,000 shares, at cost) —
Total Stockholders' Equity $ —

*Retained earnings = – $— = $ —

Copyright ã Houghton Mifflin Company. All rights reserved. Ch.12--P8-2