Part c Solution Preferred Common Total Dividends in arrears paid to preferred 8

Part c solution preferred common total dividends in

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Part (c) Solution: Preferred Common Total Dividends in arrears paid to preferred {8% x (2,000 shares x $100 par = $200,000) x 2 year} $32,000 $32,000 Current dividends paid to preferred {8% x (2,000 shares x $100 par/share = $200,000)} 16,000 16,000 Pro-ratable dividend paid to common {8% x (5,000 shares x $50 par/share = $250,000)} $20,000 20,000 Dividends available for participation ($90,000 - $32,000 - $16,000 - $20,000) = $22,000 Participating Dividends: Paid to preferred 1 {4.8889% x (2,000 shares x $100 par/share = $200,000)} 9,778 9,778 Paid to common 1 {4.8889% x (5,000 shares x $50 par/share = $250,000)} 12,222 12,222 Total dividends declared and paid $57,778 $32,222 $90,000 1 Participation = Dividends available for participation = $22,000 = $22,000 = 4.8889% rate Total Par Value of P/S and C/S (2,000 shares x $100 par/sh) + (5,000 shares x $50 par/sh) $200,000 + $250,000 When dividends are fully participating, both the preferred and common shareholders share in participating dividends at the same rate, this case 4.8889%. Alternate calculation of the participating amount: Preferred: $200,000 x $22,000 = $9,778 $450,000 Common: $250,000 x $22,000 = $12,222 $450,000
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ACCO 4020 Chapter 15 Homework Solutions (15 th edition) Kren 11 PROBLEM 15-2 (15 th edition) (a) Feb. 1 Treasury Stock (2,000 shares x $19 cost /share) 38,000 Cash 38,000 March 1 Cash (800 shares x $17 market price/share) 13,600 RE (plug) 1,600 Treasury Stock (800 shares x $19 cost/share) 15,200 March 18 Cash (500 shares x $14 market price/share) 7,000 RE (plug) 2,500 Treasury Stock (50 shares x $19 cost/share) 9,500 April 22 Cash (600 shares x $20 market price/share) 12,000 Treasury Stock (600 shares x $19 cost/share) 11,400 APIC – T/S 600 Treasury Stock (at cost $19) Debit (+) Credit (-) Feb. 1 (2,000 shares x $19) 38,000 15,200 March 1 (800 shares x $19) 9,500 March 18 (500 shares x $19) 11,400 April 22 (600 shares x $19) April 30 Ending Balance (100 shares x $19) 1,900 Part (b) CLEMSON COMPANY Partial Balance Sheet - Stockholders’ Equity Section April 30, 2012 Common stock, $5 par value, 20,000 shares issued, 19,900 shares outstanding $100,000 Paid-in capital in excess of par - common stock 300,000 Paid-in capital from treasury stock 600 Total paid-in capital $400,600 Retained Earnings 445,900 $846,500 Less: Treasury Stock (100 shares) 1,900 Total Stockholders’ Equity $844,600 CLEMSON COMPANY Statement of Retained Earnings For the Period Ended April 30, 2012 *Retained earnings (beginning balance) $320,000 Less: Reissuance of Treasury Stock (4,100) Add: Net Income 130,000 Retained Earnings (ending balance) $445,900 Note F (syllabus): For Problem 15-2, in addition to completing the requirements in the text complete the following as part (c): On May 15 the company sold the remaining treasury shares repurchased at $11 per share. Prepare the entry to record the May 15 transaction. (c) May 15 Cash (100 shares x $11 market price/share) 1,100 APIC-T/S 600 RE (plug) 200 Treasury Stock (100 shares x $19 cost/share) 1,900
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