P11-1 Finding Missing Amounts LO 11-1, 11-2, 11-3, 11-4, 11-6 At the end of the

Question

P11-1 Finding Missing Amounts LO 11-1, 11-2, 11-3, 11-4, 11-6 At the end of the year, the records of NCIS Corporation provided the following selected and incomplete data: Common stock ($10 par value); no changes in account during the year. Shares authorized: 200,000. Shares issued: Treasury stock: 3,000 shares (repurchased at $20 per share). The treasury stock was acquired after a stock split was announced. Net income: $240,340 Dividends declared and paid: $123,220 Retained earnings beginning balance: $555,000. (all shares were issued at $17 per share. Total cash collected: $2,125,000). Required 1. Complete the following tabulation: Answer is complete and correct. Shares authorized200,000 Shares issued Shares outstanding 125,000 122,000 2. Calculate the balance in the Additional Paid-in Capital account. Answer is complete and correct Additional paid-in capital $ 875,000 3. Calculate the earnings per share (EPS). (Round your answer to 2 decimal places.) Answer is complete and correct Earnings per share S 1.97

Explanation / Answer

Answers

Question asks in which section Treasury Stock are reported, the answer is Stockholder’s Equity, which you correctly entered.

However, since Treasury Stock have debit balance and are shown as a ‘deduction’ under Stockholder’s Equity, the figure in the amount column must be ‘negative’ like $ -60,000 or $(60,000)

Amount of $60000 is however correct [3000 shares x 20]

When Stock dividend is declared, dividend is debited and dividend payable is credited, and when the stock dividend is finally distributed, dividend payable is debited and common stock a/c (and additional paid in capital) is credited.

Since in the question it is mentioned that Stock dividend was “declared and ISSUED”, the correct journal entry would be:

Account Titles and Explanation

Debit

Credit

Retained earnings

$               2,56,200.00

$                                -  

Common Stock

$                                  -  

$              1,22,000.00

Additional paid In Capital

$                                  -  

$              1,34,200.00

(stock dividend distributed)

$                                 -  

Account Titles and Explanation

Debit

Credit

Retained earnings

$               2,56,200.00

$                                -  

Common Stock

$                                  -  

$              1,22,000.00

Additional paid In Capital

$                                  -  

$              1,34,200.00

(stock dividend distributed)

$                                 -  

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