ACN 305

Assignment
SUMMER 2021

1. K-Mart is the world’s leading big box department store chain. In recent years the company
has taken several steps to enhance its profitability and earnings per share. Some vital facts
about K-Mart are presented below in millions:

2019 2020
$
Net sales 13198 12397
Net income 1229 1240
Total assets 11901 11847
Total liabilities 10139 9693
Common Stock $0.25 par 105 105
value
Capital in excess of par 522 495
Retained earnings 6721 6122
Treasury stock, at cost 3130 2650
Number of shares 357 366
outstanding (in millions)

Answer the following questions:

a. What are some of the reasons that management purchases its own stock?
b. Explain how earnings per share might be affected by treasury stock transactions.
c. Prepare K Mart’s stockholder’s equity section for 2019 and 2020

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2. Answer the following questions based on your assigned company (BERGER).

a. What is the par or stated value of the assigned company’s ordinary share?
b. What percentage of the company’s authorized common stock was issued at the year of
2018 and 2019?
c. How many common shares were outstanding at the year end of 2018 and 2019?
d. What was the effect of the amount of cash dividends on the company’s shareholder’s
equity of 2019?

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3. On January 1 2010, Simac Corporation issued 3000 shares of $10 par value common stock
for $4,5000. Prepare the journal entry to record the issuance of the shares.

On January 1 2011 Simac acquired 2000 treasury share $11 per share. Prepare the journal
entry to record the purchase of the treasury shares.

1
On April 30th 2011, it sells 1000 shares at $15 per share. Prepare the journal entry to
record the sale of the treasury shares.

On July 31, it sells 500 shares at $8 per share. Prepare the journal entry to record the sale
of the treasury shares. (10)

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