accounting questions/problems

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2012. Power Drive has the following transactions affecting stockholders’ equity in 2012.

Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2012: common stock, $100,000; paid-in capital, $4,500,000; and retained earnings, $2,000,000. Net income for the year ended December

31

, 2012, is $600,000.

Required:

Prepare the statement of stockholders’ equity for Power Drive Corporation for the year ended December 31, 2012. (Amounts to be deducted should be indicated with a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

 March

 Issues 55,000 additional shares of $1 par value common stock for $52 per share.

 May

  Repurchases 5,000 shares of treasury stock for $55 per share.

 June

  Declares a cash dividend of $1.50 per share to all stockholders of record on June 15.
  (Hint: Dividends are not paid on treasury stock.)

 July

  Pays the cash dividend declared on June 1.

 October

  Reissues 2,500 shares of treasury stock purchased on May 10 for $60 per share.

Record each of these transactions. (Omit the “$” sign in your response.)

Date

General Journal

Debit

Credit

 Mar. 1

 May 10

 June 1

 July 1

 Oct. 21

Worksheet

Difficulty: Medium

Learning Objective: 10-04 Account for treasury stock.

Learning Objective: 10-02 Record the issuance of common stock.

Learning Objective: 10-05 Describe retained earnings and record cash dividends.

On March 15, American Eagle declares a quarterly cash dividend of $0.075 per share payable on April 13 to all stockholders of record on March 30.

Record American Eagle’s declaration and payment of cash dividends for its 220 million shares. (Enter your answers in dollars, not in millions. Leave no cells blank. If no entry is required, select “No journal entry required” in the account field and enter zero (0) in the amount field. Omit the “$” sign in your response.)

  March 15

  March 30

  April

13

Italian Stallion has the following transactions during the year related to stockholders’ equity.

February

Issues 5,000 shares of no-par common stock for $15 per share.

Issues 500 shares of $10 par value preferred stock for $12 per share.

Declares a cash dividend of $0.75 per share to all stockholders of record (both common
and preferred) on October 15.

Date of record.

Pays the cash dividend declared on October 1.

Record each of these transactions. (Leave no cells blank. If no entry is required, select “No journal entry required” in the account field and enter zero (0) in the amount field. Omit the “$” sign in your response.)

  Feb. 1

  May 15

  Oct. 1

  Oct. 15

  Oct. 31

Clothing Frontiers began operations on January 1, 2012, and engages in the following transactions during the year related to stockholders’ equity.

  January

  Issues 600 shares of common stock for $40 per share.

  Issues 100 additional shares of common stock for $44 per share.

Section Break

Difficulty: Hard

Exercise 10-3 Record the issuance of common stock [LO2]

1.

Record the transactions, assuming Clothing Frontiers has no-par common stock. (Omit the “$” sign in your response.)

  Jan. 1

  Apr. 1

2.

Record the transactions, assuming Clothing Frontiers has $1 par value common stock. (Omit the “$” sign in your response.)

3.

Record the transactions, assuming Clothing Frontiers’ common stock has a $1 stated value, rather than a $1 par value. (Omit the “$” sign in your response.)