Print by: BRIANDA OWEN Accounting 201 Section 70 / Ch 11 assignment P11-2A The s
ID: 2387437 • Letter: P
Question
Print by: BRIANDA OWEN
Accounting 201 Section 70 / Ch 11 assignment
P11-2A
The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized)
$300,000
Common Stock ($5 stated value, 300,000 shares authorized)
1,000,000
Paid-in Capital in Excess of Par Value - Preferred Stock
15,000
Paid-in Capital in Excess of Stated Value - Common Stock
480,000
Retained Earnings
688,000
Treasury Stock - Common (5,000 shares)
40,000
During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.
Feb. 1
Issued 5,000 shares of common stock for $30,000.
Mar. 20
Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1
Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1
Paid the dividend declared on October 1.
Dec. 1
Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31
Determined that net income for the year was $280,000. Paid the dividend declared on December 1.
Incorrect.
Journalize the transactions. (Include entries to close net income to Retained Earnings. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date
Account/Description
Debit
Credit
Feb. 1
Cash
30,000
Common Stock
25,000
Paid-in Capital in Excess of Stated Value-Common Stock
5,000
Mar. 20
Treasury Stock
7,000
Cash
7,000
Oct. 1
Cash Dividends
24,000
Dividends Payable
24,000
Nov. 1
Dividends Payable
24,000
Cash
24,000
Dec. 1
Cash Dividends
99,500
Dividends Payable
99,500
Dec. 31
Income Summary
280,000
Retained Earnings
280,000
(To close income summary)
(To close dividends)
Dividends Payable
Cash
(To pay dividends)
Incorrect.
Enter the beginning balances in the accounts and post the journal entries to the stockholders' equity accounts. (Use T accounts.) (If answer is zero please enter 0, do not leave any fields blank.)
Preferred Stock
Paid-in Cap. in Excess of Par Value - Pref. Stock
1/1
0
1/1
300,000
1/1
0
1/1
15,000
12/31 Bal.
0
12/31 Bal.
300,000
12/31 Bal.
0
12/31 Bal.
15,000
Common Stock
Paid-in Cap. in Exc. of Stated Value - Comm. Stock
1/1 Bal.
0
1/1 Bal.
1,000,000
1/1 Bal.
0
1/1 Bal.
480,000
2/1
0
2/1
25,000
2/1
0
2/1
5,000
12/31 Bal.
0
12/31 Bal.
1,025,000
12/31 Bal.
0
12/31 Bal.
485,000
Retained Earnings
Treasury Stock - Common
12/31
1/1 Bal.
688,000
1/1 Bal.
40,000
1/1 Bal.
0
12/31
0
12/31
280,000
3/20
7,000
3/20
0
12/31 Bal.
0
12/31 Bal.
12/31 Bal.
47,000
12/31 Bal.
0
Cash Dividends
10/1
24,000
10/1
0
12/1
99,500
12/31
12/31 Bal.
12/31 Bal.
0
Incorrect.
Complete the stockholders’ equity section of the balance sheet at December 31, 2010 below. (If amount should be deducted please put either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
SIGMA CORPORATION
Partial Balance Sheet
December 31, 2010
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock,
$100 par value, noncumulative,
5,000 shares authorized,
3,000 shares issued and outstanding
$ 300,000
Common stock,
no par, $5 stated value
300,000 shares authorized,
shares issued
and shares outstanding
Total capital stock
$
Additional paid-in capital
In excess of par value-preferred stock
15,000
In excess of stated value-common stock
485,000
Total additional paid-in capital
500,000
Total paid-in capital
Retained earnings
Total paid-in capital and retained earnings
Less: Treasury stock
( 6,000 common shares)
-47,000
Total Stockholders’ Equity
$
Incorrect.
Calculate the payout ratio, earnings per share, and return on common stockholders’ equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine average shares outstanding.) (Round all ratios to 1 decimal place, e.g. 25.5 and earnings per share to 2 decimal places, e.g. 2.25.)
Payout ratio
35.5 %
Earnings per share
$
Return on common stockholders' equity
%
Question Attempts: 2 of 3 used
Explanation / Answer
(a) Feb. 1 Cash 30,000
Common Stock (5,000 X $5)............................... 25,000
Paid-in Capital in Excess of
Stated Value—Common
Stock................................................................... 5,000
Mar. 20 Treasury Stock—Common (1,000 X $7)..................... 7,000
Cash ...................................................................... 7,000
Oct. 1 Cash Dividends ($300,000 X .08)................................. 24,000
Dividends Payable................................................ 24,000
Nov. 1 Dividends Payable......................................................... 24,000
Cash ...................................................................... 24,000
Dec. 1 Cash Dividends.............................................................. 99,500
[200,000* + 5,000 – (5,000 + 1,000)] X $.50
Dividends Payable................................................ 99,500
Dec. 31 Income Summary.......................................................... 280,000
Retained Earnings............................................... 280,000
31 Retained Earnings......................................................... 123,500
Cash Dividends ($24,000 + $99,500)................... 123,500
31 Dividends Payable......................................................... 99,500
Cash ...................................................................... 99,500
*$1,000,000 ÷ $5
(b)
=======================================================
Preferred Stock
Paid-in Capital in Excess of
Par Value—Preferred Stock
1/1 Bal. 300,000
1/1 Bal. 15,000
12/31 Bal. 300,000
12/31 Bal. 15,000
Common Stock
Paid-in Capital in Excess of
Stated Value—Common Stock
1/1 Bal. 1,000,000
1/1 Bal. 480,000
2/1 25,000
2/1 5,000
12/31 Bal. 1,025,000
12/31 Bal. 485,000
Retained Earnings
Treasury Stock—Common
12/31 123,500
1/1 Bal. 688,000
1/1 Bal. 40,000
12/31 280,000
3/20 7,000
12/31 Bal. 844,500
12/31 Bal. 47,000
Cash Dividends
10/1 24,000
12/1 99,500
12/31 123,500
12/31 Bal. –0–
(c) SIGMA CORPORATION
Partial Balance Sheet
December 31, 2010
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock, $100
par value, noncumulative,
5,000 shares authorized,
3,000 shares issued and
outstanding.................................................... $ 300,000
Common stock, no-par, $5
stated value, 300,000 shares
authorized, 205,000 shares
issued and 199,000 shares
outstanding.................................................... 1,025,000
Total capital stock.................................. $1,325,000
Additional paid-in capital
In excess of par value—
preferred stock.............................................. 15,000
In excess of stated value—
common stock................................................ 485,000
Total additional paid-in
capital................................................... 500,000
Total paid-in capital............................... 1,825,000
Retained earnings............................................................... 844,500
Total paid-in capital and
retained earnings................................. 2,669,500
Less: Treasury stock (6,000 common
shares) ................................................................. (47,000)
Total stockholders’ equity..................... $2,622,500
(d)
*200,000 – 5,000 **205,000 – 6,000
Return on common stockholders’ equity =
aBeginning common stockholders’ equity:
$1,000,000 + $480,000 + $688,000 – $40,000
bEnding common stockholders’ equity:
$1,025,000 + $485,000 + $844,500 – $47,000
Preferred Stock
Paid-in Capital in Excess of
Par Value—Preferred Stock
1/1 Bal. 300,000
1/1 Bal. 15,000
12/31 Bal. 300,000
12/31 Bal. 15,000
Common Stock
Paid-in Capital in Excess of
Stated Value—Common Stock
1/1 Bal. 1,000,000
1/1 Bal. 480,000
2/1 25,000
2/1 5,000
12/31 Bal. 1,025,000
12/31 Bal. 485,000
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