CHAPTER 14 - CHAPTER14 OrganizationandCorporations:...

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CHAPTER 14 Organization and Corporations: Capital Stock Transactions SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 14-1 The advantages and disadvantages of a corporation are as follows: Advantages Disadvantages Separate legal existence Limited liability of stockholders Transferable ownership rights Ability to acquire capital Continuous life Corporation management— professional management Corporation management and management separation of ownership Government regulations Additional taxes BRIEF EXERCISE 14-2 Dec. 31 Income Summary. .......................................... 450,000 Retained Earnings. ................................. 450,000 BRIEF EXERCISE 14-3 May 10 Cash (1,000 X $18). ......................................... 18,000
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Common Stock (1,000 X $10). ............... 10,000 Paid-in Capital in Excess of Par Value (1,000 X $8). ............................... 8,000 BRIEF EXERCISE 14-4 June 1 Cash (3,000 X $7). ........................................... 21,000 Common Stock (3,000 X $1). ................. 3,000 Paid-in Capital in Excess of Stated Value (3,000 X $6). ............................... 18,000
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BRIEF EXERCISE 14-5 Land (5,000 X $16). ........................................................... 80,000 Common Stock (5,000 X $10). ................................. 50,000 Paid-in Capital in Excess of Par Value. .................. 30,000 (5,000 X $6) BRIEF EXERCISE 14-6 July 1 Treasury Stock (500 X $9). ............................. 4,500 Cash. ......................................................... 4,500 Sept. 1 Cash (300 X $11). ............................................. 3,300 Treasury Stock (300 X $9). ...................... 2,700 Paid-in Capital from Treasury Stock (300 X $2) ................................... 600 BRIEF EXERCISE 14-7 Cash (5,000 X $120). ......................................................... 600,000 Preferred Stock (5,000 X $100). ............................... 500,000 Paid-in Capital in Excess of Par Value— Preferred Stock (5,000 X $20) .............................. 100,000 BRIEF EXERCISE 14-8 Stockholders’ equity Paid-in capital Capital stock
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Common stock, $10 par value, 5,000 shares issued and 4,500 shares outstanding $50,000 Additional paid-in capital In excess of par value—common stock 10,000 Total paid-in capital 60,000 Retained earnings 45,000 Total paid-in capital and retained earnings 105,000 Less: Treasury stock—common (500 shares) ( 11,000) Total stockholders’ equity $94,000
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BRIEF EXERCISE 14-9 Book value per share = $20.25, or ($810,000 ÷ 40,000).
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SOLUTIONS TO EXERCISES EXERCISE 14-1 (a) Jan. 10 Cash (70,000 X $5). ................................. 350,000 Common Stock. ............................... 350,000
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This note was uploaded on 04/04/2009 for the course ACC 321 taught by Professor Ahmedmokhtar during the Spring '09 term at Ain Shams University.

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CHAPTER 14 - CHAPTER14 OrganizationandCorporations:...

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