Chapter 11 - Reporting and Interpreting Owners’ Equity
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Alternate Cases and Exercises Problems Problems Projects No. Time No. Time No. Time No. Time 1 15 1 45 1 45 1 30 2 15 2 45 2 30 2 30 3 30 3 45 3 30 3 20 4 30 4 60 4 35 4 20 5 20 5 30 5 20 6 20 6 30 6 30 7 45 7 30 7 * 8 15 8 45 9 30 9 20 10 15 10 20 11 20 11 30 12 20 12 45 13 20 14 30 15 30 16 30 17 20 18 30 19 20 20 15 21 15 22 20 23 20 24 15 25 15 * Due to the nature of this project, it is very difficult to estimate the amount of time students will need to complete the assignment. As with any open-ended project, it is possible for students to devote a large amount of time to these assignments. While students often benefit from the extra effort, we find that some become frustrated by the perceived difficulty of the task. You can reduce student frustration and anxiety by making your expectations clear. For example, when our goal is to sharpen research skills, we devote class time to discussing research strategies. When we want the students to focus on a real accounting issue, we offer suggestions about possible companies or industries.
Mini exercises No. Time 1 5 2 5 3 5 4 5 5 5 6 5 7 5 8 5 9 5 10 5 Financial Accounting, 8/e 11-5 ? 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
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Chapter 11 - Reporting and Interpreting Owners’ Equity
MINI- EXERCISES
M11–1.
Stockholders may:
a) Vote in the stockholders’ meeting (or by proxy) on major issues concerning management of the corporation. b) Participate proportionately with other stockholders in the distribution of the corporation’s profits. c) Share proportionately with other stockholders in the distribution of corporate assets upon liquidation.
Being able to vote is the most important of the rights because this ensures that the owners have an input at the stockholders’ meeting and some control of the management of the corporation, thus enabling them to protect their rights as stockholders. M11–2.
Unissued shares = 90,000 (268,000 – 178,000) M11–3.
Cash (170,000 ? $21) (+A) ...........................................3,570,000
Common Stock (170,000 ? $1) (+SE) ......................
Capital in Excess of Par (+SE) .................................
The journal entry would be different if the par value were $2:
Cash (170,000 ? $21) (+A) ...........................................3,570,000
Common Stock (170,000 ? $2) (+SE) ......................
Capital in Excess of Par (+SE) .................................
340,000 3,230,000
170,000 3,400,000
11-6 Solutions Manual ? 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 11 - Reporting and Interpreting Owners’ Equity
M11–4.
Common stock is the basic voting stock issued by a corporation. It ranks after preferred stock for dividends and assets distributed upon liquidation of the
corporation. The dividend rate for common stock is determined by the board of directors, and is based on the company’s profitability. The dividend rate for
preferred stock is fixed by a contract. Common stock has more potential for growth than preferred stock if the company is profitable. On the other hand, the investor may lose more money with common stock than with preferred stock if the company is not profitable.
Usually, It is advisable to invest in the common stock if you believe the company will be profitable. Common stock will receive a higher return on the $100,000 than preferred stock would.
M11–5. Purchased 20,000 shares of treasury stock Sold 5,000 shares Sold 10,000 shares M11–6. 200,000 X $0.65
= $130,000 Assets Decrease by $900,000 Liabilities No change Stockholders’ Equity Decrease by $900,000 Net Income No change Increase by $250,000 Increase by $370,000 No change No change Increase by $250,000 Increase by $370,000 No change No change Financial Accounting, 8/e 11-7 ? 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 11 - Reporting and Interpreting Owners’ Equity
M11–7.
April 15:
Retained Earnings (-SE) .............................................. Dividends Payable (+L) ............................................June 14:
Dividends Payable (-L) ................................................. Cash (-A) .................................................................. M11–8. Past Year Current Year Total to Preferred Stockholders M11–9. Stock Dividend No change in assets No change in liabilities Increase in common stock Stock Split No change in assets No change in liabilities No change in common stock 200,000 shares ? $2 200,000 shares ? $2 = = $400,000 $400,000 $800,000 65,000
65,000
65,000
65,000
No change in stockholders’ equity: No change in stockholders’ equity decrease retained earnings and increase contributed capital by the same amount. Decreases market value M11–10.
Retained Earnings (-SE) .............................................. Common Stock (+SE) ..............................................
11-8 Solutions Manual Decrease in market value 800,000
800,000
? 2014 by McGraw-Hill Global Education Holdings, LLC. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.