Chpt. 13 answers

Chpt. 13 answers - SOLUTIONS TO BRIEF EXERCISES BRIEF...

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 13-1 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— separation of ownership and management Government regulations Additional taxes BRIEF EXERCISE 13-2 Dec. 31 Income Summary . ......................................... 450,000 Retained Earnings . ............................... 450,000 BRIEF EXERCISE 13-3 May 10 Cash (2,000 X $18) . ....................................... 36,000 Common Stock (2,000 X $10) . .............. 20,000 Paid-in Capital in Excess of Par Value (2,000 X $8) . ............................. 16,000 BRIEF EXERCISE 13-4 June 1 Cash (3,000 X $6) . ......................................... 18,000 Common Stock (3,000 X $1) . ................ 3,000 Paid-in Capital in Excess of Stated Value (3,000 X $5) . ............................. 15,000
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BRIEF EXERCISE 13-5 Land (5,000 X $15) . ......................................................... 75,000 Common Stock (5,000 X $10) . ............................... 50,000 Paid-in Capital in Excess of Par Value . ................ 25,000 (5,000 X $5) BRIEF EXERCISE 13-6 July 1 Treasury Stock (500 X $8) . ............................ 4,000 Cash . ....................................................... 4,000 Sept. 1 Cash (300 X $11) . ........................................... 3,300 Treasury Stock (300 X $8) . .................... 2,400 Paid-in Capital from Treasury Stock (300 X $3) . ................................ 900 BRIEF EXERCISE 13-7 Cash (5,000 X $130) . ....................................................... 650,000 Preferred Stock (5,000 X $100) . ............................. 500,000 Paid-in Capital in Excess of Par Value— Preferred Stock (5,000 X $30) . ........................... 150,000 BRIEF EXERCISE 13-8 Stockholders’ equity Paid-in capital Capital stock 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 20,000 Total paid-in capital 70,000 Retained earnings 45,000 Total paid-in capital and retained earnings 115,000 Less: Treasury stock—common (500 shares) (11,000 ) Total stockholders’ equity $104,000
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BRIEF EXERCISE 13-9 Book value per share = $20.50, or ($820,000 ÷ 40,000).
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SOLUTIONS TO EXERCISES EXERCISE 13-1 1. True. 2. True. 3. False. Most of the largest U.S. corporations are publicly held corporations. 4. True. 5. False. The net income of a corporation is taxed as a separate entity. 6. False. Creditors have no legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. 7.
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This note was uploaded on 05/05/2010 for the course ACCT 221 taught by Professor Strauss during the Fall '07 term at Maryland.

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Chpt. 13 answers - SOLUTIONS TO BRIEF EXERCISES BRIEF...

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