Chapter_13_Solutions_7e

# Chapter_13_Solutions_7e - Chapter 13 Corporations: Paid-in...

This preview shows pages 1–6. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 13 Corporations: Paid-in Capital and the Balance Sheet Quick Check Answers: 1. c 3. a 5. d 7. b 9. c 2. a 4. a 6. c 8. d 10. b Explanations: 5. d. Debit Cash for \$100,000 (100,000 shares \$1). Credit Common Stock for \$5,000 (100,000 shares \$.05 par value). Credit Paid-in Capital in Excess of Par for \$95,000, the premium account. 7. b. Common gets dividends of \$40,000 after preferred gets total dividends of \$10,000 (\$5,000 for 2008 and \$5,000 for 2009). The annual preferred dividend is \$5,000 (10,000 shares \$10 par .05). Chapter 13 Corporations: Paid-in Capital and the Balance Sheet 53 8. d. Total stockholders equity is \$180,000, computed as follows: Common stock, \$1 par, 10,000 shares issued.. \$ 10,000 Paid-in capital in excess of par [10,000 shares (\$10 \$1)].. 90,000 Retained earnings 80,000 Total stockholders equity. \$180,000 9. c. Return on assets is 10%, computed as follows: Net income + Interest expense = \$22,000 + \$8,000 = .10 Average total assets \$300,000 Accounting 7/e Solutions Manual 54 Short Exercises (5 min.) S 13-1 1. The chairperson of the board of directors is usually the most powerful person in a corporation. 2. The stockholders hold ultimate power in a corporation. 3. The president is in charge of day-to-day operations. 4. The vice-president of accounting and finance is in charge of accounting. (5 min.) S 13-2 DIFFERENCE: A proprietorship balance sheet reports a single capital account, such as Joe Hopper, Capital. A corporation balance sheet reports stockholders equity by source. There are two sources: paid-in capital and retained earnings. SIMILARITY: A proprietorship balance sheet and a corporation balance sheet both report assets and liabilities the same way. Chapter 13 Corporations: Paid-in Capital and the Balance Sheet 55 (5 min.) S 13-3 Journal ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT a. Cash (1,000 \$10) 10,000 Common Stock (1,000 \$1) 1,000 Paid-in Capital in Excess of Par 9,000 b. Cash 20,000 Preferred Stock (1,000 \$20) 20,000 (5 min.) S 13-4 1. The \$31,968,000 is paid-in capital in excess of par. It is not a profit and therefore has no effect on net income. (5-10 min.) S 13-5 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT Cash 4,600 Common Stock 750 Paid-in Capital in Excess of Par 3,850 Issued stock. Accounting 7/e Solutions Manual 56 (5 min.) S 13-6 Stockholders equity: Paid-in capital: Common stock, \$1 par, 40,000 shares issued..... \$40,000 Paid-in capital in excess of par...................... 17,000 Total paid-in capital.......................... 57,000 Retained earnings..................................... 16,000 Total stockholders equity........................... \$73,000 (5 min.) S 13-7 a. Accounts payable................................. \$ 6,000 Unearned revenue.............................Unearned revenue....
View Full Document

## This note was uploaded on 05/05/2010 for the course BUSINESS 71395 taught by Professor Brown during the Spring '09 term at Miss. College.

### Page1 / 45

Chapter_13_Solutions_7e - Chapter 13 Corporations: Paid-in...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online