Financial Accounting: An Integrated Statements Approach, 2nd Edition

526 Chapter 11 Stockholders’ Equity: Capital Stock and Dividends

Alternate Problem

11-2B

Stock transactions for corpo-

rate expansion

Goal 3

Alternate Problem

11-3B

Selected stock transactions

Goals3, 4, 7

GENERAL LEDGER

Goal 2

1. Common dividends in
   2005: $22,000

Instructions

1. Calculate the total dividends and the per-share dividends declared on each class of stock
   for each of the six years. There were no dividends in arrears on January 1, 2003. Summarize
   the data in tabular form, using the following column headings:

Total Preferred Dividends Common Dividends

Year Dividends Total Per Share Total Per Share

2003 $18,000

2004 54,000

2005 70,000

2006 75,000

2007 80,000

2008 90,000

2. Calculate the average annual dividend per share for each class of stock for the six-year period.


3. Assuming that the preferred stock was sold at par and common stock was sold at $39.20 at
   the beginning of the six-year period, calculate the average annual percentage return on ini-
   tial shareholders’ investment, based on the average annual dividend per share (a) for pre-
   ferred stock and (b) for common stock.

On January 1 of the current year, the following accounts and their balances appear in the ledger

of Dahof Corp., a meat processor:

Preferred 4% Stock, $100 par (20,000 shares authorized, 6,000 shares issued) $ 600,000

Paid-In Capital in Excess of Par—Preferred Stock 120,000

Common Stock, $50 par (100,000 shares authorized, 50,000 shares issued) 2,500,000

Paid-In Capital In Excess of Par—Common Stock 320,000

Retained Earnings 1,675,000

At the annual stockholders’ meeting on March 6, the board of directors presented a plan for

modernizing and expanding plant operations at a cost of approximately $800,000. The plan pro-

vided (a) that a building, valued at $225,000, and the land on which it is located, valued at

$45,000, be acquired in accordance with preliminary negotiations by the issuance of 4,800 shares

of common stock, (b) that 3,000 shares of the unissued preferred stock be issued through an un-

derwriter, and (c) that the corporation borrow $155,000. The plan was approved by the stock-

holders and accomplished by the following transactions:

Apr. 3 Issued 4,800 shares of common stock in exchange for land and a building, according to

the plan.

18 Issued 3,000 shares of preferred stock, receiving $125 per share in cash from the

underwriter.

28 Borrowed $155,000 from Northeast National Bank, giving an 8% mortgage note.

No other transactions occurred during April.

Instructions

Journalize the entries to record the foregoing transactions.

The following selected accounts appear in the ledger of Kingfisher Environmental Corporation

on March 1, 2007, the beginning of the current fiscal year:

Preferred 2% Stock, $75 par (10,000 shares authorized, 8,000 shares issued) $ 600,000

Paid-In Capital in Excess of Par—Preferred Stock 100,000

Common Stock, $10 par (50,000 shares authorized, 35,000 shares issued) 350,000

Paid-In Capital in Excess of Par—Common Stock 85,000

Retained Earnings 1,050,000