Question

Required information Problem 11-4A Analysis of changes in stockholders' equity accounts LO C3, P2, P3 (The following information applies to the questions displayed below.) The equity sections from Atticus Group's 2017 and 2018 year-end balance sheets follow. Stockholders' Equity (December 31, 2017) Common stock-$4 par value, 100, 000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 160,000 120,000 340,000 $ 620,000 Stockholders' Equity (December 31, 2018) Common stock-$4 par value, 100,000 shares authorized, 47, 400 shares issued, 3,000 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($40,000 restricted by treasury stock) $189,600 179,200 440,000 808,800 (40,000) $768,800 Less cost of treasury stock Total stockholders' equity The following transactions and events affected its equity during year 2018. Jan. 5 Declared a $0.60 per share cash dividend, date of record January 10. Mar. 20 Purchased treasury stock for cash. Apr. 5 Declared a $0.60 per share cash dividend, date of record April 10. July 5 Declared a $0.60 per share cash dividend, date of record July 10. July 31 Declared a 20% stock dividend when the stock's market value was $12 per share. Aug. 14 Issued the stock dividend that was declared on July 31. Oct. 5 Declared a $0.60 per share cash dividend, date of record October 10.

Answer 1

Answers

• [1]

	05-Jan	05-Apr	05-Jul	05-Oct
Outstanding Common shares	40,000	37,000	37,000	44,400
Working Notes:	Existing as beginning balance	3,000 treasury stock purchased	[ no transaction affected no. of shares	[37000 x 20% stock dividend]
		[40000-3000]	between these dates]	[37000 + 7400]

• [2]

Working		05-Jan	05-Apr	05-Jul	05-Oct
A	Outstanding Common shares	40,000	37,000	37,000	44,400
B	Dividend per share	$                       0.60	$                     0.60	$                     0.60	$                     0.60
C = A x B	Answer: Cash Dividends amount	$            24,000.00	$           22,200.00	$           22,200.00	$          26,640.00

• [3]

A	Outstanding shares on Jul 31	37,000
B	Stockdividend rate	20%
C = A x B	No. of stock to be issued as Stock Dividends	7,400
D	Market value per share	$                    12.00
E = C x D	Capitalization amount of Retained Earnings	$            88,800.00

• [4]

A	Treasury Stock value	$            40,000.00
B	No. of shares as Treasury Stock	3,000
C = A/B	Cost per share	$                    13.33

• [5]

Retained earnings - Ending balance	$          440,000.00
Total Cash Dividends	$            95,040.00
Total Stock Dividends	$            88,800.00
Total	$          623,840.00
Less: Retained earnings - Beginning balance	$          340,000.00
Net Income	$          283,840.00