ACCT 302 Connect Homework 18 Shareholder's Equity Assignment solutions complete answers

ACCT 302 Connect Homework 18 Shareholder's Equity Assignment solutions complete answers 

 

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Lewelling Company issued 114,000 shares of its $1 par common stock to the Michael Morgan law firm as compensation for 5,400 hours of legal services performed. Morgan’s usual rate is $230 per hour.
 
By what amount should Lewelling’s paid-in capital - excess of par increase as a result of this transaction?

 

Horton Industries’ shareholders’ equity included 240 million shares of $1 par common stock and a balance in paid-in capital - excess of par of $1,920 million.
 
Assuming that Horton retires shares it reacquires (restores their status to that of authorized but unissued shares), by what amount will Horton’s total paid-in capital decline if it reacquires 4 million shares at $7.50 per share? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

 

In previous years, Cox Transport reacquired 3 million treasury shares at $16 per share and, later, 2 million treasury shares at $21 per share.
 
By what amount will Cox’s paid-in capital - share repurchase increase if Cox now sells 2 million treasury shares at $24 per share and determines the cost of treasury shares by the FIFO method? (Enter answer in millions (i.e., 10,000,000 should be entered as 10).)

 

On June 13, the board of directors of Siewert Inc. declared a 5% stock dividend on its 60 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $27 on June 13.
  
Complete the below table to calculate the stock dividend.
Prepare a journal entry that summarizes the declaration and distribution of the stock dividend.

 

The following is from the 2021 annual report of Kaufman Chemicals, Inc.:
 

Statements of Comprehensive Income
Years Ended December 31
 
2021
 
2020
 
2019
Net income
$
922
 
 
$
752
 
 
$
607
 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized gains on AFS investments, net of tax of
$25, ($13), and $22 in 2021, 2020, and 2019, respectively
 
38
 
 
 
(24
)
 
 
30
 
Other
 
(3
)
 
 
(1
)
 
 
1
 
Total comprehensive income
$
957
 
 
$
727
 
 
$
638
 
 

Kaufman reports accumulated other comprehensive income in its balance sheet as a component of shareholders' equity as follows:
 

 
($ in millions)
 
2021
2020
Shareholders’ equity:
 
 
 
 
 
 
Common stock
 
365
 
 
365
 
Additional paid-in capital
 
8,777
 
 
8,777
 
Retained earnings
 
7,857
 
 
7,301
 
Accumulated other comprehensive income
 
119
 
 
84
 
Total shareholders’ equity
$
17,118
 
$
16,527
 
 

Required:
4. From the information provided, determine how Kaufman calculated the $119 million accumulated other comprehensive income in 2021. (Negative amount should be indicated by a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

 

At December 31, 2020, the balance sheet of Meca International included the following shareholders' equity accounts:
 

Shareholders’ Equity
($ in millions)
Common stock, 80 million shares at $1 par
$
80
 
Paid-in capital—excess of par
 
440
 
Retained earnings
 
550
 
 

Required:
Assuming that Meca International views its share buybacks as treasury stock, record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
 

1.   On February 12, 2021, Meca reacquired 1 million common shares at $14 per share.

2.   On June 9, 2022, Meca reacquired 2 million common shares at $11 per share.

3.   On May 25, 2023, Meca sold 2 million treasury shares at $17 per share. Determine cost as the weighted-average cost of treasury shares.

4.   For the previous transaction, assume Meca determines the cost of treasury shares by the FIFO method.

 

The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2020:
 

 
 
Paid-in capital:
 
 
 
Preferred stock, 8.0%, 83,000 shares at $1 par
$
83,000
 
Common stock, 333,300 shares at $1 par
 
333,300
 
Paid-in capital—excess of par, preferred
 
1,455,000
 
Paid-in capital—excess of par, common
 
2,505,000
 
Retained earnings
 
8,345,000
 
Treasury stock, at cost; 3,300 common shares
 
(36,300
)
Total shareholders' equity
$
12,685,000
 
 

During 2021, several events and transactions affected the retained earnings of Consolidated Paper.
 
Required:
1. Prepare the appropriate entries for these events.

a.   On March 3, the board of directors declared a property dividend of 215,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $632,000). The investment shares had a fair value of $3 per share and were distributed March 31 to shareholders of record March 15.

b.   On May 3, a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $11 per share.

c.    On July 5, a 1% common stock dividend was declared and distributed. The market value of the common stock was $11 per share.

d.   On December 1, the board of directors declared the 8.0% cash dividend on the 83,000 preferred shares, payable on December 28 to shareholders of record December 20.

e.   On December 1, the board of directors declared a cash dividend of $0.40 per share on its common shares, payable on December 28 to shareholders of record December 20.


2. Prepare the shareholders' equity section of the balance sheet for Consolidated Paper, Inc., at December 31, 2021. Net income for the year was $730,000.

 

National Supply’s shareholders’ equity included the following accounts at December 31, 2020:
 

Shareholders' Equity
 
Common stock, 4 million shares at $1 par
$
4,000,000
Paid-in capital—excess of par
 
16,000,000
Retained earnings
 
73,000,000
 

Required:
1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock.
 

 
 
February 15, 2021
Reacquired 140,000 shares at $7 per share.
February 17, 2022
Reacquired 140,000 shares at $4.50 per share.
November 9, 2023
Sold 80,000 shares at $6 per share (assume FIFO cost).
 

2. Prepare the shareholders’ equity section of National Supply’s balance sheet at December 31, 2023, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $12 million in 2021, $13 million in 2022, and $14 million in 2023. No dividends were paid during the three-year period.

 

Comparative statements of retained earnings for Renn-Dever Corporation were reported in its 2021 annual report as follows.
 

RENN-DEVER CORPORATION
Statements of Retained Earnings
For the Years Ended December 31
 
2021
 
2020
 
2019
 
Balance at beginning of year
$
7,109,452
 
$
5,770,552
 
$
5,944,552
 
Net income (loss)
 
3,528,700
 
 
2,420,900
 
 
(174,000
)
Deductions:
 
 
 
 
 
 
 
 
 
Stock dividend (37,500 shares)
 
262,500
 
 
 
 
 
 
 
Common shares retired (132,000 shares)
 
 
 
 
264,000
 
 
 
 
Common stock cash dividends
 
959,950
 
 
818,000
 
 
0
 
Balance at end of year
$
9,415,702
 
$
7,109,452
 
$
5,770,552
 
 

At December 31, 2018, common shares consisted of the following:
 

 
 
 
Common stock, 1,925,000 shares at $1 par
$
1,925,000
Paid-in capital—excess of par
 
11,550,000
 

Required:
Infer from the reports the events and transactions that affected Renn-Dever Corporation’s retained earnings during 2019, 2020, and 2021. Prepare the journal entries that reflect those events and transactions.  (Hint: In lieu of revenues and expenses, use an account titled "Income summary" to close net income or net loss.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

The shareholders’ equity of Kramer Industries includes the data shown below. During 2022, cash dividends of $220 million were declared. Dividends were not declared in 2020 or 2021.
 

 
($ in millions)
Common stock
$
260
 
Paid-in capital—excess of par, common
 
1,040
 
Preferred stock, 10%, nonparticipating
 
130
 
Paid-in capital—excess of par, preferred
 
390
 
 

Required:
Determine the amount of dividends payable to preferred shareholders and to common shareholders under each of the following two assumptions regarding the characteristics of the preferred stock. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
 
Assumption A — The preferred stock is noncumulative.
Assumption B — The preferred stock is cumulative.