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P 11-1A

and P 11-8A

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Prepare dividend entries, prepare & stockholders' equity section. and caiculate ratios *P11-8A On January 1 2017. Tacoma Corporation had these stockholders' equity accounts. 700,000 500,000 620,000 Common Stock ($10 par value, 70,000 shares issued and outstanding) Paid-in Capital in Excess of Par Value Retained Earmings O 3.4,51, AP GLS During the year, the following transactions occurred. 581 Comprehensive Accounting Cycle Review Jan. 15 Declared a $0.50 cash dividend per share to stockholders of record on January 1, payable February 15 Feb. 15 Paid the dividend declared in January Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distribut- able May 15. On April 15, the market price of the stock was $14 per share. May 15 Issued the shares for the stock dividend. Dec. Declared a $0.60 per share cash dividend to stockholders of record on Decem- ber 15, payable January 10, 2018 31 Detemined that net income for the year was S400,000. (a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.) b)Enter the beginning balances and post the entries to the stockholders' equity T-accounts Note: Open additional stockholders equity accounts as needed.) (c) Prepare the stockholders' equity section of the balance sheet at December 31 (d) Calculate the payout ratio and return on common stackholders' equity Ic) Tot, stockholders $2,138,800 equity PROBLEMS: SETA uuntaa testockiniti ich ins pos, and prepare paid i" capul P11-1A Tidal Corporation was organized on January 1, 2017. It is authorized to issue 20.000 shares of 6% $50 par value preferred stock and 500,000 shares of no par common stock with a stated value o $1 per share. The following stock transactions were completed during the first year Jan. 10 Issued 70,000 shares of common stock for cash at $4 per share. Mar 1 Issued 12,000 shares of preferred stock for cash at $53 per share. May 1 Issued 120,000 shares of common stock for cash at $6 per share. Sept. Issued 5,000 shares of common stock for cash at $5 per share Nov. Issued 3,000 shares of preferred stock for cash at $56 per share GLS Instructions (a) Joumalize the transactions (b) Post to the stockholders' equityaccounts. (Use T-accounts.) (e) Prepare the paid-in capital portion of the stockholders' equity section at December 31, c) Tot.paid-in capital 1,829,000 2017

Answer 1

1. a. In the books of Tacoma Corporation :

Date	General Journal	Debit	Credit
		$	$
Jan 15	Retained Earnings	35,000
	Dividends Payable		35,000
Feb 15	Dividends Payable	35,000
	Cash		35,000
April 15	Retained Earnings	98,000
	Common Stock Dividend Distributable ( 70,000 x 10 % x $ 10 )		70,000
	Paid-in Capital in Excess of Par Value		28,000
May 15	Common Stock Dividend Distributable	70,000
	Common Stock		70,000
Dec 1	Retained Earnings ( 70,000 + 7,000) shares @ $ 0.60	46,200
	Dividends Payable		46,200
Dec 31	Income Summary	400,000
	Retained Earnings		400,000

b.

Common Stock
		Beginning balance	700,000
		May 15	70,000
		Ending balance	770,000

Paid-in Capital in Excess of Par Value
		Beginning balance	500,000
		April 15	28,000
		Ending balance	528,000

Retained Earnings
Jan 15	35,000	Beginning balance	620,000
April 15	98,000	Dec 31	400,000
Dec 1	46,200
		Ending balance	840,800

c.

Tacoma Corporation Balance Sheet ( Partial ) December 31
Stockholders' Equity
Common Stock ( $ 10 par value, 77,000 shares issued and outstanding )	$ 770,000
Paid-in Capital in Excess of Par Value	528,000
Retained Earnings	840,800
Total Stockholders' Equity	$ 2,138,800

d. Payout ratio = Total Dividends / Net Income = $ 179,200 / $ 400,000 * 100 = 44.80 %

Return on common stockholders' equity = Net Income / Average Total Stockholders' Equity = $ 400,000 / $ 1,979,400 * 100 = 20.21 %

2. a. In the books of Tidal Corporation :

Date	General Journal	Debit	Credit
		$	$
Jan 10	Cash	280,000
	Common Stock		70,000
	Paid-in Capital in Excess of Stated Value : Common Stock		210,000
Mar 1	Cash	636,000
	Preferred Stock		600,000
	Paid-in Capital in Excess of Par Value: Preferred Stock		36,000
May 1	Cash	720,000
	Common Stock		120,000
	Paid-in Capital in Excess of Stated Value : Common Stock		600,000
Sept 1	Cash	25,000
	Common Stock		5,000
	Paid-in Capital in Excess of Stated Value : Common Stock		20,000
Nov 1	Cash	168,000
	Preferred Stock		150,000
	Paid-in Capital in Excess of Par Value : Preferred Stock		18,000

b.

Preferred Stock
		Mar 1	600,000
		Nov 1	150,000
		Ending balance	750,000

Common Stock
		Jan 10	70,000
		May 1	120,000
		Sept 1	5,000
		Ending balance	195,000

Paid-in Capital in Excess of Par Value : Preferred Stock
		Mar 1	36,000
		Nov 1	18,000
		Ending balance	54,000

Paid-in Capital in Excess of Stated Value : Common Stock
		Jan 10	210,000
		May 1	600,000
		Sept 1	20,000
		Ending balance	830,000

c.  

Tidal Corporation Balance Sheet ( Partial ) December 31
Stockholders' Equity
Preferred Stock ( $ 50 par, 15,000 shares issued and outstanding )	$ 750,000
Common Stock ( $ 1 stated value, 195,000 shares issued and outstanding )	195,000
Paid-in Capital in Excess of Par Value : Preferred Stock	54,000
Paid-in Capital in Excess of Stated Value : Common Stock	830,000
Total Paid-in Capital	$ 1,829,000