Chapter 11

Chapter 11 - CHAPTER 11 CHAPTER 11 BRIEF EXERCISE 11-3 1 Cash Common Stock Additional Paid-In CapitalCommon 34,000 20,000 14,000*Cash = 2,000

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CHAPTER 11 CHAPTER 11 BRIEF EXERCISE 11-3 1. Cash 34,000* Common Stock 20,000** Additional Paid-In Capital—Common 14,000*** *Cash = 2,000 shares × $17 = $34,000 **Common Stock = 2,000 shares × $10 = $20,000 ***Additional Paid-In Capital—Common = 2,000 shares × ($17 – $10) = $14,000 Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues Expenses = Net Income Cash 34,000 Common Stock 20,000 Additional Paid-In Capital—Com- mon 14,000 2. Land 7,000 Preferred Stock 5,000 Additional Paid-In Capital—Preferred 2,000 Market value may be indicated by the value of the consideration given (stock) or the value of the consideration received (property), whichever can be most readily determined. Land was appraised at $7,000. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues Expenses = Net Income Land 7,000 Preferred Stock 5,000 Additional Paid-In Capital—Prefer- 1
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CHAPTER 11 red 2,000 BRIEF EXERCISE 11-3 CONTINUED 3. Advertising Expense 60,000* Common Stock 50,000** Additional Paid-in Capital—Common 10,000*** *Advertising Expense = 5,000 shares × $12 = $60,000 **Common Stock = 5,000 shares × $10 = $50,000 ***Additional Paid-In Capital—Common = 5,000 shares × ($12 – $10) = $10,000 Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenues Expenses = Net Income Common Stock 50,000 Additional Paid-In Capital—Com- mon 10,000 (60,000) Advertising Expense 60,000 (60,000) BRIEF EXERCISE 11-5 a. Preferred dividend in arrears ($100,000 × 8% × 2 years) $16,000 Common stock (0) b. Preferred dividend in arrears ($100,000 × 8% × 2 years) $16,000 2
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CHAPTER 11 Preferred dividend for current year ($100,000 × 8%) 8,000 Total $24,000 Common stock (0) c. Preferred dividend in arrears ($100,000 × 8% × 2 years) $16,000 Preferred dividend for current year ($100,000 × 8%) 8,000 Total $24,000 Common stock ($60,000 – $24,000 = $36,000)
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This note was uploaded on 04/14/2011 for the course ACCT 2101 taught by Professor Christianwurst during the Spring '08 term at Temple.

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Chapter 11 - CHAPTER 11 CHAPTER 11 BRIEF EXERCISE 11-3 1 Cash Common Stock Additional Paid-In CapitalCommon 34,000 20,000 14,000*Cash = 2,000

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