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223_Hwk_11_Solutions

223_Hwk_11_Solutions - HA 223 Fall 2006 Homework 11...

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HA 223 – Fall 2006 – Homework 11 – Solution M11–2. Unissued shares = 43,000 (200,000 – 157,000) M11–7. April 15: Retained Earnings (-SE) ........................................................ 100,000 Dividends Payable (+L) ...................................................... 100,000 June 14: Dividends Payable (-L) ........................................................... 100,000 Cash (-A) ............................................................................ 100,000 E11–5. Req. 1 a. Cash (6,000 shares x $20) (+A) ............................................. 120,000 Common stock (6,000 shares x $8) (+SE) ......................... 48,000 Contributed capital in excess of par, common stock (+SE) 72,000 Sold common stock at a premium. b. Cash (2,000 shares x $23) (+A) ............................................. 46,000 Common stock (2,000 shares x $8) (+SE) ......................... 16,000 Contributed capital in excess of par, common stock (+SE) 30,000 Sold common stock at a premium. Req. 2 Stockholders’ Equity Contributed capital: Common stock, par $8, authorized 12,000 shares, outstanding 8,000 shares ...................................................................... $ 64,000 Contributed capital in excess of par ......................................................... 102,000 Total contributed capital ........................................................................... 166,000 Retained earnings (deficit) ........................................................................... (7,000) Stockholders’ equity ..................................................................................... $159,000 Req. 3 The company has a negative balance in retained earnings, which, in most cases, would preclude the payment of dividends. Dividends are a distribution of earnings to the owners. In the absence of earnings, dividends should not be paid.
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E11–8.
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