Check your answers on your PE's then do your EX 13-1 to 13-8

1. PRACTICE EXERCISES
PE 13–1A
Year 1 Year 2 Year 3
Amount distributed $40,000 $10,000 $120,000
Preferred dividend (10,000 shares) 15,000 10,000 15,000
Common dividend (25,000 shares) $ 25,000 $ 0 $105,000
Dividends per share:
Preferred stock $1.50 $1.00 $1.50
Common stock $1.00 None $4.20
PE 13–1B
Year 1 Year 2 Year 3
Amount distributed $20,000 $ 4,000 $40,000
Preferred dividend (5,000 shares) 7,500 4,000 7,500
Common dividend (10,000 shares) $ 12,500 $ 0 $ 32,500
Dividends per share:
Preferred stock $1.50 $0.80 $1.50
Common stock $1.25 None $3.25
PE 13–2A
Aug. 3 Cash....................................................................... 5,760,000
Common Stock................................................ 4,500,000
Paid-In Capital in Excess of Stated Value.... 1,260,000
(45,000 shares × $128).
Sept. 22 Cash....................................................................... 150,000
Preferred Stock............................................... 150,000
(2,000 shares × $75).
Nov. 4 Cash....................................................................... 240,000
Preferred Stock............................................... 225,000
Paid-In Capital in Excess of Par.................... 15,000
(3,000 shares × $80).
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2. PE 13–2B
July 6 Cash....................................................................... 960,000
Common Stock................................................ 960,000
(800,000 shares × $1.20).
Aug. 30 Cash....................................................................... 500,000
Preferred Stock............................................... 500,000
(10,000 shares × $50).
Oct. 14 Cash....................................................................... 405,000
Preferred Stock............................................... 375,000
Paid-In Capital in Excess of Par.................... 30,000
(7,500 shares × $54).
PE 13–3A
July 16 Cash Dividends..................................................... 48,000
Cash Dividends Payable................................ 48,000
Aug. 15 No entry required.
Sept. 30 Cash Dividends Payable...................................... 48,000
Cash.................................................................. 48,000
PE 13–3B
Oct. 1 Cash Dividends..................................................... 90,000
Cash Dividends Payable................................ 90,000
Nov. 1 No entry required.
Dec. 24 Cash Dividends Payable...................................... 90,000
Cash.................................................................. 90,000
PE 13–4A
Feb. 13 Stock Dividends (300,000 × 3% × $63)............... 567,000
Stock Dividends Distributable (9,000 × $40) 360,000
Paid-In Capital in Excess of Par—
Common Stock ($567,000 – $360,000).......... 207,000
Mar. 14 No entry required.
Apr. 30 Stock Dividends Distributable............................ 360,000
Common Stock................................................ 360,000
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3. PE 13–4B
May 10 Stock Dividends (250,000 × 2% × $60)............... 300,000
Stock Dividends Distributable (5,000 × $50) 250,000
Paid-In Capital in Excess of Par—
Common Stock ($300,000 – $250,000).......... 50,000
June 9 No entry required.
Aug. 1 Stock Dividends Distributable............................ 250,000
Common Stock................................................ 250,000
PE 13–5A
Jan. 24 Treasury Stock (6,000 × $18)............................... 108,000
Cash.................................................................. 108,000
Mar. 15 Cash (4,500 × $21)................................................ 94,500
Treasury Stock (4,500 × $18)......................... 81,000
Paid-In Capital from Sale of
Treasury Stock [4,500 × ($21 – $18)]............. 13,500
June 2 Cash (1,500 × $17)................................................ 25,500
Paid-In Capital from Sale of
Treasury Stock [1,500 × ($18 – $17)].................. 1,500
Treasury Stock (1,500 × $18)......................... 27,000
PE 13–5B
Oct. 2 Treasury Stock (12,000 × $6)............................... 72,000
Cash.................................................................. 72,000
Nov. 15 Cash (8,400 × $9).................................................. 75,600
Treasury Stock (8,400 × $6)........................... 50,400
Paid-In Capital from Sale of
Treasury Stock [8,400 × ($9 – $6)]................. 25,200
Dec. 22 Cash (3,600 × $5).................................................. 18,000
Paid-In Capital from Sale of
Treasury Stock [3,600 × ($6 – $5)]...................... 3,600
Treasury Stock (3,600 × $6)........................... 21,600
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4. PE 13–6A
Stockholders’ Equity
Paid-in capital:
Common stock, $80 par (30,000 shares
authorized, 25,000 shares issued).................. $ 2,000,000
Excess of issue price over par............................. 315,000 $ 2,315,000
From sale of treasury stock.................................. 33,000
Total paid-in capital......................................... $ 2,348,000
Retained earnings....................................................... 1,112,000
Total........................................................................ $ 3,460,000
Deduct treasury stock (2,000 shares at cost).......... 180,000
Total stockholders’ equity......................................... $ 3,280,000
PE 13–6B
Stockholders’ Equity
Paid-in capital:
Common stock, $75 par (50,000 shares
authorized, 45,000 shares issued).................. $ 3,375,000
Excess of issue price over par............................. 485,000 $ 3,860,000
From sale of treasury stock.................................. 18,000
Total paid-in capital......................................... $ 3,878,000
Retained earnings....................................................... 1,452,000
Total........................................................................ $ 5,330,000
Deduct treasury stock (5,000 shares at cost).......... 420,000
Total stockholders’ equity......................................... $ 4,910,000
PE 13–7A
DYNAMIC LEADERS INC.
Retained Earnings Statement
For the Year Ended July 31, 2008
Retained earnings, August 1, 2007............................ $ 988,500
Net income................................................................... $325,000
Less dividends declared............................................ 125,000
Increase in retained earnings..................................... 200,000
Retained earnings, July 31, 2008............................... $ 1,188,500
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5. PE 13–7B
MAXIMA RETRACTORS INC.
Retained Earnings Statement
For the Year Ended October 31, 2008
Retained earnings, November 1, 2007.............................. $ 2,906,000
Net income........................................................................... $553,000
Less dividends declared.................................................... 300,000
Increase in retained earnings............................................. 253,000
Retained earnings, October 31, 2008................................ $ 3,159,000
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