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KIMMEL_2e_Acct_ch11

Accounting: Tools for Business Decision Making

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CHAPTER 11 Reporting and Analyzing Stockholders’ Equity Study Objectives 1. Identify and discuss the major characteristics of a corporation. 2. Record the issuance of common stock. 3. Explain the accounting for the purchase of treasury stock. 4. Differentiate preferred stock from common stock. 5. Prepare the entries for cash dividends and understand the effect of stock dividends and stock splits. 6. Identify the items that affect retained earnings. 7. Prepare a comprehensive stockholders’ equity section. 8. Evaluate a corporations’ dividend and earnings performance from a stockholder’s perspective. Summary of Questions by Study Objectives and Bloom’s Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT Questions 1. 1 C 6. 2 K 11. 4 C 16. 5 C 21. 8 C 2. 1 C 7. 2, 3 AP 12. 6 C 17. 5 C 22. 8 C 3. 1 C 8. 2 C 13. 7 C 18. 5 C 23. 8 C 4. 1 K 9. 3 C 14. 5 K 19. 5 C 24. 8 C 5. 1 K 10. 3 C 15. 5 C 20. 6 C 25. 8 C Brief Exercises 1. 1 K 4. 4 AP 6. 5 AP 8. 7 AP 10. 8 AP 2. 2 AP 5. 5 AP 7. 5 K 9. 8 C 11. 9* AP 3. 2 AP Exercises 1. 2 AP 4. 2, 3, 6. 5 AP 10. 7 AP 14. 9* AP 2. 2, 3, 4, 7 C 7. 5 AP 11. 8 AP 4 AP 5. 2, 3, 8. 7 AP 12. 8 AP 3. 4, 7 AP 4 AN 9. 7 AP 13. 8 AN Problems: Set A 1. 2, 4, 2. 2, 3, 3. 7 AP 5. 2, 3, 7. 8 AP 7 AN 5, 7, 4. 5, 6, 4, 7 AP 8. 5, 7, 8 AP 7 AP 6. 7 AP 8, 9* AP Problems: Set B 1. 2, 4, 2. 2, 3, 3. 7 AP 5. 3, 7 AP 8. 5, 7, 7 AN 5, 7, 4. 5, 6, 6. 7 AP 8, 9* AP 8 AP 7 AP 7. 8 AP 11-1
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ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Journalize stock transactions, post, and prepare paid-in capital section. Simple 30–40 2A Journalize transactions, post, and prepare a stockholders’ equity section; calculate ratios. Moderate 40–50 3A Prepare a stockholders’ equity section. Moderate 20–30 4A Reproduce retained earnings account, and prepare a stockholders’ equity section. Moderate 30–40 5A Prepare entries for stock transactions, and prepare a stockholders’ equity section. Moderate 20–30 6A Prepare a stockholders’ equity section. Simple 20–30 7A Evaluate a company’s profitability and solvency. Moderate 20–30 *8A Prepare dividend entries, prepare a stockholders’ equity section, and calculate ratios. Moderate 40–50 1B Journalize stock transactions, post, and prepare paid-in capital section. Simple 30–40 2B Journalize transactions, post, and prepare a stockholders’ equity section; calculate ratios. Moderate 40–50 3B Prepare a stockholders’ equity section. Moderate 20–30 4B Reproduce retained earnings account, and prepare a stockholders’ equity section. Moderate 30–40 5B Prepare a stockholder’s equity section. Moderate 20–30 6B Prepare a stockholders’ equity section. Simple 20–30 7B Evaluate a company’s profitability and solvency. Moderate 30–40 *8B Prepare dividend entries, prepare a stockholders’ equity section, and calculate ratios. Moderate 40–50 11-2
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ANSWERS TO QUESTIONS 1. (a) Separate legal existence. A corporation is separate and distinct from its owners and it acts in its own name rather than in the name of its stockholders. In contrast to a partnership, the
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