Test Bank for Intermediate Accounting, Fourteenth Edition
— Treasury Stock
The stockholders' equity section of Carey Co.'s balance sheet at December 31, 2012, was as
Common stock--$10 par (authorized 1,000,000 shares,
issued and outstanding 600,000 shares)
Paid-in capital in excess of par
Prepare journal entries (1, 2, and 4) and show proper disclosure (3) to reflect the following
treasury stock transactions showing how each is accounted for under the cost method. (Show
On January 4, 2013, having idle cash, Carey Co. repurchased 20,000 shares of its out-
standing stock for $500,000.
On March 4, Carey sold 5,000 of these reacquired shares at $28 per share.
Show the proper disclosures in the stockholders' equity section of the balance sheet issued at
the end of the first quarter, March 31, 2013. Assume net income of $100,000 during the first
On June 30, 2013 the firm sold 10,000 of the reacquired shares for $21 per share.
— Cash Dividends
Bell Company has stock outstanding as follows: Common, $10 par value per share, 140,000
shares; Preferred, 5%; $100 par value per share, 8,000 shares. The Preferred is cumulative and
participating up to an additional 4% of par; two years are in arrears (not including the current
year); and the total amount of cash dividends declared for both classes of stock is $230,000.
Prepare the entry for the dividend declaration, separating the dividend into the common and
D - 2