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Solutions for chapter 12

Solutions for chapter 12 - PROBLEM 12-4B(a NORWAY COMPANY...

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PROBLEM 12-4B (a) NORWAY COMPANY Retained Earnings Statement For the Year Ended December 31, 2002 Balance, January 1, as reported ................ $ 900,000 Correction for understatement of net income in 2001 (depreciation error) ....... 100,000 Balance, January 1, as adjusted ................ 1,000,000 Add: Net income ........................................ 3,600,000 4,600,000 Less: Cash dividends—common .............. $1,490,000* Cash dividends—preferred ............. 800,000 2,290,000 Balance, December 31 ................................. $2,310,000 *(1,500,000 – 10,000) X $1
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PROBLEM 12-4B (Continued) (b) NORWAY COMPANY Partial Balance Sheet Stockholders’ equity Paid-in capital Capital stock Preferred stock, $100 par value, 8%, cumula- tive, 100,000 shares issued and outstanding ...... $10,000,000 Common stock, $10 par value, 1,500,000 shares issued and 1,490,000 shares outstanding .............. 15,000,000 Total capital stock ............ 25,000,000 Additional paid-in capital In excess of par value— preferred stock ..................... $1,000,000 In excess of par value— common stock ...................... 1,500,000 Total additional paid-in capital ............................. 2,500,000 Total paid-in capital .......... 27,500,000 Retained earnings ................................. 2,310,000 Total paid-in capital and retained earnings .......... 29,810,000 Less: Treasury stock—common (10,000 shares) ........................ 160,000 Total stockholders’ equity .............................. $29,650,000
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PROBLEM 12-5B (a) Retained Earnings Nov. 1 Cash Dividend (6) 400,000 * Dec. 31 Stock Dividend 140,000* Jan. 1 Balance (4) 2,200,000 Dec. 31 Net income (8) 880,000 Dec. 31 Balance
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