2293 Chapter 11 Textbook Solutions 292

2293 Chapter 11 Textbook Solutions 292 - Chapter 11...

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Unformatted text preview: Chapter 11 Textbook Solutions 11-25 a) 1. Cash (A) 40,000 Common shares (SE) 40,000 2. Cash (A) 45,000 Preferred shares (SE) 45,000 3. Preferred dividends declared (SE) 3,000 Preferred dividends payable (L) 3,000 Common dividends declared (SE) 12,000 Common dividends Payable (L) 12,000 4. Preferred dividends payable (L) 3,000 Common dividends Payable (L) 12,000 Cash (A) 15,000 5. Common shares (SE) 5,000 Retained earnings (SE) 1,000 Cash (A) 6,000 6. Income summary (SE) 90,000 Retained earnings (SE) 90,000 b) Preferred shares $1(3,000 issued and $45,000 outstanding, 25,000 authorized) Common shares (3,500 issued, 35,000 and outstanding, 100,000 authorized) Retained earnings * 74,000 Total shareholders equity $154,000 * $90,000 3,000 12,000 -1,000 = $74,000 c) The owners would have designated the preferred shares as non- voting in order to maintain control over the corporation. That is, in order to maintain the initial shared control structure resulting from the original common share issuance to the owners (each with 25% control). 11-26 a) 1. Cash (A) 640,000 Common shares (SE) 640,000 2. Preferred dividends declared (SE) 50,000 Cash (A) 50,000 3. Stock dividends declared (SE) 1,120,000 Stock dividends issuable (SE) 1,120,000 [(300,000 + 20,000 ) x 10% x $35] One month after declaration: Stock dividends issuable (SE) 1,120,000 Common shares (SE) 1,120,000 4. Dividends declared (SE) 528,000 Dividends payable (L) 528,000 [(300,000 + 20,000 + 32,000) x $1.50] 5. Income summary (SE) 1,420,000 Retained earnings (SE) 1,420,000 6. No entry number of common shares has increased from 352,000 shares to 704,000 shares b) Preferred shares (25,000 issued and...
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This note was uploaded on 09/25/2010 for the course FMGT FMGT 2293 taught by Professor Hamere. during the Summer '09 term at Langara.

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2293 Chapter 11 Textbook Solutions 292 - Chapter 11...

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