Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 11 Stockholders’ Equity: Capital Stock and Dividends 521

Big Boy Toys Inc. retails racing products for BMWs, Porsches, and Ferraris. The following ac-

counts and their balances appear in the ledger of Big Boy Toys Inc. on October 31, the end of

the current year:

Common Stock, $4 par $ 600,000

Paid-In Capital in Excess of Par—Common Stock 210,000

Paid-In Capital in Excess of Par—Preferred Stock 78,000

Paid-In Capital from Sale of Treasury Stock—Common 42,000

Preferred 2% Stock, $100 par 480,000

Retained Earnings 3,903,000

Treasury Stock—Common 120,000

Ten thousand shares of preferred and 250,000 shares of common stock are authorized. There are

12,000 shares of common stock held as treasury stock.

Prepare the Stockholders’ Equity section of the balance sheet as of October 31, the end of

the current year.

The stockholders’ equity T-accounts of Tender Heart Greeting Cards Inc. for the current fiscal

year ended December 31, 2007, are as follows. Prepare a statement of stockholders’ equity for

the fiscal year ended December 31, 2007.

Exercise 11-22

Statement of stockholders’
equity

Goal 8

Total stockholders’ equity,
Dec. 31, $2,285,000

Exercise 11-21

Stockholders’ Equity section of
balance sheet

Goal 8
Total stockholders’ equity,
$5,193,000

COMMON STOCK

Jan. 1 Balance 500,000

Mar. 13 Issued

50,000 shares 100,000

Dec. 31 Balance 600,000

PAID-IN CAPITAL IN EXCESS OF PAR

Jan. 1 Balance 400,000

Mar. 13 Issued

50,000 shares 45,000

Dec. 31 Balance 445,000

TREASURY STOCK

Apr. 30 Purchased

10,000 shares 25,000

RETAINED EARNINGS

June 30 Dividend 25,000 Jan. 1 Balance 1,075,000

Dec. 30 Dividend 25,000 Dec. 31 Closing

(net income) 240,000

Dec. 31 Balance 1,265,000

Procter & Gambleis the largest manufacturer of consumer household products in the United

States. The selected entries at the top of the following page were disclosed on the statement of

stockholders’ equity for a recent year:

Exercise 11-23

Statement of stockholders’
equity and cash flows

Goals8, 9