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628
Ex. 12-2

Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of
cumulative preferred 1% stock, $125 par and 100,000 shares of $150 par common. During its first four
years of operations, the following amounts were distributed as dividends: first year, $36,000; second
year, $58,000; third year, $75,000; fourth year, $124,000. Determine the dividends per share on each
class of stock for each of the four years.

Required Annual Preff Dividends

No of Pref shared $ 40,000.00
Annual Preferred Dividends 1%
Par Value $ 125.00
Required Annual Pref Dividends $ 50,000.00

Preffered div Common div Total div

Year 1 $ 36,000.00 $ - $ 36,000.00
Year 2 $ 58,000.00 $ - $ 58,000.00
Year 3 $ 56,000.00 $ 19,000.00 $ 75,000.00
Year 4 $ 50,000.00 $ 74,000.00 $ 124,000.00

Pref Div per Share Comm Div/share

Year 1 $ 0.90 $ -
Year 2 $ 1.45 $ -
Year 3 $ 1.40 $ 0.19
Year 4 $ 1.25 $ 0.74

Ex. 12-3

On January 22, Jefferson County Rocks Inc., a marble contractor, issued for cash 230,000 shares of $20
par common stock at $25, and on February 27, it issued for cash 12,000 shares of preferred stock, $8 par
at $14.

a. Journalize the entries for January 22 and February 27.

Cash received(common) $ 5,750,000.00

 Cash received(preferred) $ 168,000.00

Value(common) $ 4,600,000.00

Value(Preferred) $ 96,000.00

Common stock Dr Cr
Cash $ 5,750,000.00
Common stock $ 4,600,000.00
Paid in Cap in excess $ 1,150,000.00

Preferred stock Dr Cr
Cash $ 168,000.00
Preferred stock $ 96,000.00
Paid in Cap in excess $ 72,000.00

b. What is the total amount invested (total paid-in capital) by all stockholders as of February 27?

Cash received(common) $ 5,750,000.00

Cash received(preferred) $ 168,000.00
Total Invested $ 5,918,000.00

Page. 629
Ex. 12-4

On May 15, Helena Carpet Inc., a carpet wholesaler, issued for cash 625,000 shares of no-par common
stock (with a stated value of $2.25) at $5, and on June 30, it issued for cash 22,000 shares of preferred
stock, $50 par at $62.

a. Journalize the entries for May 15 and June 30, assuming that the common stock is to be credited
with the stated value.

15-May Common stock Dr Cr

Cash $ 3,125,000.00
Common stock $ 1,406,250.00
Paid in Cap in excess $ 1,718,750.00

30-Jun Preferred Stock Dr Cr

 Cash $ 1,364,000.00
preferred Stock $ 1,100,000.00
Paid in Cap in excess $ 264,000.00

b. What is the total amount invested (total paid-in capital) by all stockholders as of June 30?

Common stock $ 3,125,000.00

Preferred Stock $ 1,364,000.00
Total $ 4,489,000.00

Ex. 12-5

On November 23, Elder Lift Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for
14,200 shares of $25 par common stock with a current market price of $34. Journalize the entry to
record the transaction.

Common stock Dr Cr
Land $ 482,800.00
Common stock $ 355,000.00
Paid in Cap in excess $ 127,800.00

Ex. 12-6

Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and
Gretchen Northway. The charter authorized 1,000,000 shares of common stock with a par of $1. The
following transactions affecting stockholders’ equity were completed during the first year of operations:

a. Issued 100,000 shares of stock at par to Paul Glenn for cash.

Common stock Dr Cr
cash $ 100,000.00
Common stock $ 100,000.00
b.
Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in
connection with the organization of the corporation and issued 45,000 shares of stock at par to
Michele Kirby for cash.

Dr Cr
Promotional Expense $ 3,000.00
Common stock $ 3,000.00

Common stock Dr Cr
cash $ 45,000.00
 Common stock $ 45,000.00

c. Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The
land has a fair value of $60,000, and the building has a fair value of $120,000.

Dr Cr
Land $ 60,000.00
Building $ 120,000.00
Common stock $ 180,000.00