Chapter 12- Sol. of assigned problems

Chapter 12- Sol. of assigned problems - Chapter 12...

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Chapter 12 Reporting and Interpreting Owners’ Equity E12–1 Req. 1 a. Cash (5,000 shares x $20) (A). .............................................. 100,000 Common shares (SE). ........................................................ 100,000 Sold common shares. b. Land (600 shares x $20) (A). .................................................. 12,000 Common shares (SE). ........................................................ 12,000 Purchased land in exchange for 600 common shares. c. Cash (2,000 shares x $21) (A). .............................................. 42,000 Common shares (SE). ........................................................ 42,000 Sold common shares. d. Retained earnings (SE). ......................................................... 7,000 Income summary. ............................................................... 7,000 Closing entry to transfer the loss to Retained earnings. Req. 2 Sampson Corporation Shareholders’ Equity December 31, 2005 Share capital: Common shares, authorized 12,000 shares, outstanding 7,600 shares. ..................................................................... $154,000 Retained earnings (deficit). .......................................................................... (7,000) Shareholders’ equity. .................................................................................... $147,000 Req. 3 Sampson 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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E12–3 Req. 1 Nguyen Corporation Shareholders’ Equity December 31, 2005 Share capital: Preferred shares, $1, authorized 50,000 shares, issued and outstanding, 12,000 shares. ............................................... $300,000 Common shares, authorized 200,000 shares, issued and outstanding, 25,000 shares. ............................................... 500,000 Total share capital. ............................................................................ $800,000 Retained earnings*. ......................................................................................... 20,000 Total shareholders’ equity. ....................................................................... $820,000 *($40,000, net income – $20,000, dividends = $20,000.) Req. 2
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Chapter 12- Sol. of assigned problems - Chapter 12...

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