Economia

Chapter 14
Exercises: Set B
E14-1B On January 1, Celine Corporation had 95,000 shares of no-par common stock issued and
outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Journalize cash dividends; indicate statement presentation.

Apr. 1
June 15
July 10
Dec. 1
15

(SO 1)

Issued 55,000 additional shares of common stock for $17 pershare.
Declared a cash dividend of $1 per share to stockholders of record on June 30.
Paid the $1 cash dividend.
Issued 2,000 additional shares of common stock for $19 per share.
Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of
record on December 31.

Instructions
(a) Prepare the entries, if any, on each of the three dividend dates.
(b) How aredividends and dividends payable reported in the financial statements prepared at
December 31?
E14-2B Ortiz Corporation was organized on January 1, 2011. During its first year, the corporation issued 2,000 shares of $50 par value preferred stock and 100,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2011, $5,000,
2012, $12,000, and 2013,$28,000.

Allocate cash dividends to preferred and common stock.
(SO 1)

Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and cumulative.
(c) Journalize the declaration of the cash dividend at December31, 2013, under part (b).
E14-3B On January 1, 2012, Iona Corporation had $1,200,000 of common stock outstanding that was issued at par. It also had retained earnings of $750,000. The company issued
40,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year.

Journalize stock dividends.
(SO 1)

Instructions
Journalize the declaration of a 15% stockdividend on December 10, 2012, for the following
independent assumptions.
1. Par value is $10, and market value is $18.
2. Par value is $5, and market value is $20.
E14-4B On October 31, the stockholders’ equity section of Staar Company consists of common
stock $500,000 and retained earnings $800,000. Staar is considering the following two courses of
action: (1) declaring a 5% stock dividend onthe 50,000, $10 par value shares outstanding, or (2)
effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price
is $14 per share.

Compare effects of a stock dividend and a stock split.
(SO 1)

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity, outstanding shares, and book valueper share. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split.
E14-5B

On October 1, Janine Corporation’s stockholders’ equity is as follows.
Common stock, $10 par value
Paid-in capital in excess of par
Retained earnings

$400,000
25,000
155,000

Total stockholders’ equity

$580,000

On October 1, Janine declares and distributes a 10%stock dividend when the market value of
the stock is $15 per share.
Instructions
(a) Compute the per value per share (1) before the stock dividend and (2) after the stock
dividend.
(b) Indicate the balances in the three stockholders’ equity accounts after the stock dividend
shares have been distributed.

Compute book value per share;
indicate account balances after
a stock dividend.
(SO 1,3)

64

Chapter 14 Corporations: Dividends, Retained Earnings, and Income Reporting

Indicate the effects on
stockholders’ equity
components.
(SO 1, 2, 3)

E14-6B

During 2012, Klooster Corporation had the following transactions and events.

1. Declared a cash dividend.
2. Issued par value common stock for cash below par value.
3. Completed a 2-for-1 stock split in which $10...