FM9e_SM11 - CHAPTER 11Solutions CONTRIBUTED CAPITAL Chapter...

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Ch11 SE1 to SE4 CHAPTER 11—Solutions CONTRIBUTED CAPITAL Chapter 11, SE 1. 1. c 5. e 2. a 6. a 3. b 4. d Chapter 11, SE 2. 1. Advantage 4. Advantage 2. Disadvantage 5. Disadvantage 3. Advantage 6. Advantage Chapter 11, SE 3. Start-up and organization costs: Legal services, 12,000 shares of $1 par value common stock $20,000 Incorporation fees 12,000 Total start-up and organization costs $32,000 Income Statement Effect: Start-up and organization costs ($32,000) Balance Sheet Effect: Retained earnings ($32,000) Chapter 11, SE 4. 1. The fair value of the option must be estimated on June 6 to determine the expense of the option. 2. The market price on the exercise date is relevant to Dafoe because it is the value of the shares she can purchase for the $8 per share option price. It is not relevant to the company since the company only receives the option price.
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Ch11 SE5 to SE6 Chapter 11, SE 5. Fina Corporation Balance Sheet December 31, 2010 Stockholders' Equity Contributed capital Common stock, $10 par value, 30,000 shares authorized, 20,000 shares issued, and 19,500 shares outstanding $200,000 Additional paid-in capital 100,000 Total contributed capital $300,000 Retained earnings 15,000 Total contributed capital and retained earnings $315,000 Less treasury stock, common (500 shares, at cost) 7,500 Total stockholders' equity $307,500 Chapter 11, SE 6. Cash Dividends Payable Jun. 15 28,000 Jun. 15 28,000 May 15 28,000 Dividends May 15 28,000 * Note: No entry necessary for June 1. 140,000 shares outstanding x $0.20 per share *
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Ch11 SE7 Chapter 11, SE 7. Preferred Stock Common Stock Dividends Dividends Total Per Per Dividends Amount Share Amount Share Allocated 2009 2010 2009 dividends in arrears $16,000 ( $200,000 x 0.08 ) 2010 dividends ( $200,000 x 0.08 ) 16,000 ( $40,000 $32,000 ) _______ $ 8,000 Totals $32,000 $16.00 $ 8,000 $0.20 $40,000 2011 2011 dividends ( $200,000 x 0.08 ) $16,000 ( $80,000 $16,000 ) _______ $64,000 Totals $16,000 $ 8.00 $64,000 $1.60 $80,000
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Ch11 SE8 to SE9 Chapter 11, SE 8. 1. Cash 30,000 Common Stock 12,500 Additional Paid-in Capital 17,500 Issued 2,500 shares of $5 par value common stock at $12 per share 2. Cash 30,000 Common Stock 2,500 Additional Paid-in Capital 27,500 Issued 2,500 shares of $1 stated value common stock at $12 per share Chapter 11, SE 9. 1. Land 224,000 Common Stock 32,000 Additional Paid-in Capital 192,000 Issued 32,000 shares of $1 par value common stock for land; market value of common stock used to value transaction 32,000 shares at $7 = $224,000 2. Land 200,000 Common Stock 32,000 Additional Paid-in Capital 168,000 Issued 32,000 shares of $1 par value common stock for land; market value of land used to value transaction
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Ch11 SE10 to SE11 Chapter 11, SE 10. Oct.
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FM9e_SM11 - CHAPTER 11Solutions CONTRIBUTED CAPITAL Chapter...

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