Fundamentals of Financial Accounting: Unit 7 Assignment (Chapter 11)

Fundamentals of Financial Accounting
Unit 7 Assignment (Chapter 11)

M11-3 Computing the Number of Unissued Shares
The balance sheet for Crutcher Corporation reported 247,000 shares outstanding,300,000 shares authorized, and 20,000 shares in treasury stock. Compute the maximum number of new shares that Crutcher could issue.

M11-8 Determining the Amount of a Dividend
Netpass Company has 300,000 shares of common stock authorized, 270,000 shares issued, and 100,000 shares of treasury stock.
The company's board of directors declares a dividend of 50 cents per share of common stock.
What is the total amount of the dividend that will be paid?

M11-9 Recording Dividends
On April 15, 2010, the board of directors of declared a cash dividend of 40 cents per share payable to stockholders of record on May 20.
The dividends will be paid on June 14. The company has 500,000 shares of stock outstanding.
Prepare any necessary journal entries for each date.

E11-1 Computing Shares Outstanding
The 2008 annual report for Fortune Brands, the seller of Pinnacle golf balls and Masterlock padlocks, disclosed that 750 million shares of common stock have been authorized.
At the end of 2007, 235 million shares had been issued and the number of shares in treasury stock was 81 million. During 2008, 1 million common shares were reissued from treasury and 5 million common shares were purchased for treasury stock.

Determine the number of common shares a) issued, b) in treasury, and c) outstanding at the end of 2008.

E11-2 Reporting Stockholders' Equity and Determining Dividend Policy
Incentive Corporation was organized in 2009 to operate a financial consulting business. The charter authorized the following capital stock:
common stock, par value $4 per share, 12,000 shares. During the first year, the following selected transactions were completed:
a. Issued 6,000 shares of common stock for cash at $20 per share.
b. Issued 2,000 shares of common stock for cash at $23 per share.

1. Show the effects of each transaction on the accounting equation.
2. Give the journal entry required for each of these transactions.
3. Prepare the stockholders equity section as it should be reported on the 2009 year- end balance sheet. At year- end, the accounts reflected a profit of $ 100.
4. Incentive Corporation has $ 30,000 in the companys bank account. Should the company declare cash dividends at this time? Explain.

E11-3 Preparing the Stockholders' Equity Section of the Balance Sheet
North Wind Aviation received its charter during January 2010. The charter authorized the following capital stock:
Preferred stock: 8 percent, par $10, authorized 20,000 shares.
Common stock: par $7, authorized 50,000 shares.

During 2010, the following transactions occurred in the order given:
a. Issued a total of 40,000 shares of the common stock to the company's founders for $11 per share.
b. Issued 5,000 shares of the preferred stock at $18 per share.
c. Issued 3,000 shares of the common stock at $14 per share and 1,000 shares of the preferred stock at $28.
d. Net income for the first year was $48,000.

Prepare the stockholders' equity section of the balance sheet at December 31, 2010.

PA11-2 Recording Cash Dividends
National Chocolate Corp. produces chocolate bars and snacks under the brand names Blast and Soothe. A press release contained the following information:

March 5, 2010— National Chocolate Corp. today announced that its Board of Directors has declared a special “ one- time” cash dividend of $ 1.00 per share on its one million outstanding common shares. The dividend will be paid on April 30 to shareholders of record at the close of business on March 26.

1. Prepare any journal entries that National Chocolate Corp. should make as the result of information in the preceding report. Assume that the company has 1.0 million shares outstanding on March 5, the par value is $ 0.01 per share, and the stock price is $ 10 per share.
2. What two requirements would the board of directors have considered before making the dividend decisions?

E11-7 Finding Amounts Missing from the Stockholders' Equity Section
The stockholders’ equity section on the December 31, 2009, balance sheet of Chemfast Corporation reported the following amounts:
Contributed Capital
Preferred Stock (par $ 20; authorized 10,000 shares, ? issued, of which 500 shares are held as treasury stock) 104,000
Additional Paid- in Capital, Preferred 14,300
Common Stock ( no- par; authorized 20,000 shares, issued and outstanding 8,000 shares) 600,000
Retained Earnings 30,000
Preferred Treasury Stock, 500 shares at cost 9,500

Assume that no shares of treasury stock have been sold in the past.

Complete the following statements and show your computations.
1. The number of shares of preferred stock issued was .
2. The number of shares of preferred stock outstanding was .
3. The average issue price of the preferred stock was $ per share.
4. The average issue price of the common stock was $ .
5. The treasury stock transaction increased (decreased) stockholders’ equity by .
6. The treasury stock cost $ per share?
7. Total stockholders’ equity is $ .
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