Ex.

154
The corporate charter of Hunter Corporation allows the issuance of a maximum of
2,500,000 shares of $1 par value common stock. During its first three years of operation,
Hunter issued 1,500,000 shares at $15 per share. It later acquired 30,000 of these shares
as treasury stock for $25 per share.
Instructions
Based on the above information, answer the following questions:
(a) How many shares were authorized?
(b) How many shares were issued?
(c) How many shares are outstanding?
(d) What is the balance of the Common Stock account?
(e) What is the balance of the Treasury Stock account?
Ex. 155
Garner Corporation is authorized to issue 1,000,000 shares of $5 par value common
stock. During 2008, its first year of operation, the company has the following stock
transactions.
Jan. 1 Paid the state $2,000 for incorporation fees.
Jan. 15 Issued 500,000 shares of stock at $7 per share.
Jan. 30 Attorneys for the company accepted 500 shares of common stock as payment
for legal services rendered in helping the company incorporate. The legal
services are estimated to have a value of $8,000.
July 2 Issued 100,000 shares of stock for land. The land had an asking price of
$900,000. The stock is currently selling on a national exchange at $8 per share.
Sept. 5 Purchased 15,000 shares of common stock for the treasury at $10 per share.
Dec. 6 Sold 11,000 shares of the treasury stock at $11 per share.
Instructions
Journalize the transactions for Garner Corporation.
Solution 155 (12–14 min.)
Jan. 1 Organization Expense ................................................. 2,000
Cash .................................................................... 2,000
Jan. 15 Cash ............................................................................ 3,500,000
Common Stock .................................................... 2,500,000
Paid-In Capital in Excess of Par Value ................ 1,000,000
Jan. 30 Organization Expense ................................................. 8,000
Common Stock .................................................... 2,500
Paid-in Capital in Excess of Par Value ................ 5,500
July 2 Land ............................................................................. 800,000
Common Stock .................................................... 500,000
Paid-In Capital in Excess of Par Value ................ 300,000
Sept. 5 Treasury Stock............................................................. 150,000
Cash .................................................................... 150,000
Dec. 6 Cash ............................................................................ 121,000
Treasury Stock..................................................... 110,000
Paid-In Capital from Treasury Stock .................... 11,000
Ex. 156
Prepare the necessary journal entry for each of the following transactions for Starr
Corporation.
(a) Issued 2,000 shares of its $5 par value common stock for $16 per share.
(b) Issued 5,000 shares of its stock for land advertised for sale at $80,000. Starr's stock is
actively traded at a market price of $15 per share.
Solution 156 (5 min.)
(a) Cash (2,000 × $16,000) ........................................................ 32,000
Common Stock ............................................................ 10,000
Paid-in Capital in Excess of Par Value ........................ 22,000
(b) Land (5,000 × $15) ................................................................ 75,000
Common Stock ............................................................ 25,000
Paid-in Capital in Excess of Par Value ........................ 50,000
Ex. 158
The following items were shown on the balance sheet of Herman Corporation on
December 31, 2008:
Stockholders’ Equity
Paid-In Capital
Capital Stock
Common stock, $5 par value, 360,000 shares
authorized; ______ shares issued and ______ outstanding .......... $1,650,000
Additional paid-in capital
In excess of par value .................................................................... 165,000
Total paid-in capital .................................................................. 1,815,000
Retained Earnings .................................................................................... 750,000
Total paid-in capital and retained earnings .................................... 2,565,000
Less: Treasury stock (15,000 shares) ..................................................... (180,000)
Total stockholders' equity .............................................................. $2,385,000
Instructions
Complete the following statements and show your computations.
(a) The number of shares of common stock issued was _______________.
(b) The number of shares of common stock outstanding was ____________.
(c) The sales price of the common stock when issued was $____________.
(d) The cost per share of the treasury stock was $_______________.
(e) The average issue price of the common stock was $______________.
(f) Assuming that 25% of the treasury stock is sold at $20 per share, the balance in the
Treasury Stock account would be $_______________.
Ex. 159
On May 1, Hite Corporation purchased 1,000 shares of its $10 par value common stock at
a cash price of $13/share. On July 15, 600 shares of the treasury stock were sold for cash
at $15/share.
Instructions
Journalize the two transactions.
Solution 159 (5–7 min.)
May 1 Treasury Stock ............................................................... 13,000
Cash .................................................................... 13,000
Jul. 15 Cash (600 × $15)............................................................ 9,000
Treasury Stock..................................................... 7,800
Paid-in Capital from Treasury Stock .................... 1,200
Ex. 160
Werner Corporation has the following stockholders' equity accounts on January 1, 2008:
Common Stock, $10 par value .................................... $1,500,000
Paid-in Capital in Excess of Par ................................... 200,000
Retained Earnings........................................................ 500,000
Total Stockholders' Equity ...................................... $2,200,000
The company uses the cost method to account for treasury stock transactions. During
2008, the following treasury stock transactions occurred:
April 1 Purchased 9,000 shares at $16 per share.
August 1 Sold 3,000 shares at $18 per share.
October 1 Sold 3,000 shares at $15 per share.
Instructions
(a) Journalize the treasury stock transactions for 2008.
Solution 160 (15–20 min.)
(a) Apr. 1 Treasury Stock..................................................... 144,000
Cash ............................................................ 144,000

Aug. 1 Cash .................................................................... 54,000

Treasury Stock (3,000 × $16) ...................... 48,000
Paid-in Capital from Treasury Stock (3,000 × $2) 6,000
Oct. 1 Cash .................................................................... 45,000
Paid-in Capital from Treasury Stock (3,000 × $1) 3,000
Treasury Stock (3,000 × $16) ...................... 48,000
Ex. 161
Bates Corporation purchased 2,000 shares of its $5 par value common stock for a cash
price of $12 per share. Two months later, Bates sold the treasury stock for a cash price of
$10 per share.
Instructions
Prepare the journal entry to record the sale of the treasury stock assuming
(a) No balance in Paid-in Capital from Treasury Stock.
(b) A $3,000 balance in Paid-in Capital from Treasury Stock.
Solution 161 (7-9 min.)
(a) Cash...................................................................................... 20,000
Retained Earnings [($12 – $10) × 2,000] .............................. 4,000
Treasury Stock............................................................. 24,000
(b) Cash...................................................................................... 20,000
Paid-in Capital from Treasury Stock...................................... 3,000
Retained Earnings................................................................. 1,000
Treasury Stock............................................................. 24,000
Ex. 163
On January 1, 2008, Edmond Company issued 30,000 shares of $2 par value common
stock for $150,000. On March 1, 2008, the company purchased 4,000 shares of its
common stock for $8 per share for the treasury. On June 1, 2008, 1,000 of the treasury
shares are sold for $10 per share. On September 1, 2008, 2,000 treasury shares are sold
at $6 per share.
Instructions
Journalize the stock transactions of Edmond Company in 2008.
Jan. 1 Cash ............................................................................ 150,000
Common Stock .................................................... 60,000
Paid-In Capital in Excess of Par Value ................ 90,000
March 1 Treasury Stock............................................................. 32,000
Cash .................................................................... 32,000
June 1 Cash ............................................................................ 10,000
Treasury Stock..................................................... 8,000
Paid-In Capital from Treasury Stock .................... 2,000
Sept. 1 Cash ............................................................................ 12,000
Paid-In Capital from Treasury Stock ............................ 2,000
Retained Earnings ....................................................... 2,000
Treasury Stock.....................................................
16,000
Ex. 164
Wixen Company originally issued 30,000 shares of $5 par common stock for $180,000 on
January 3, 2008. Wixen purchased 1,500 shares of treasury stock for $12,000 on
November 2, 2008. On December 6, 2008, 600 shares of the treasury stock are sold for
$6,000.
Instructions
Prepare journal entries to record these stock transactions.
Jan. 3 Cash ............................................................................ 180,000
Common Stock .................................................... 150,000
Paid-In Capital in Excess of Par Value ................ 30,000
Nov. 2 Treasury Stock............................................................. 12,000
Cash .................................................................... 12,000
Dec. 6 Cash ............................................................................ 6,000
Treasury Stock..................................................... 4,800
Paid-In Capital from Treasury Stock .................... 1,200
Ex. 165
The stockholders' equity section of Palmer Corporation's balance sheet at December 31,
2007, appears below:
Stockholders' equity
Paid-in capital
Common stock, $10 par value, 400,000 shares authorized;
250,000 issued and outstanding $2,500,000
Paid-in capital in excess of par 1,200,000
Total paid-in capital 3,700,000
Retained earnings 600,000
Total stockholders' equity $4,300,000
During 2008, the following stock transactions occurred:
Jan. 18 Issued 50,000 shares of common stock at $30 per share.
Aug. 20 Purchased 25,000 shares of Palmer Corporation's common stock at $24 per
share to be held in the treasury.
Nov. 5 Reissued 9,000 shares of treasury stock for $28 per share.
Instructions
(a) Prepare the journal entries to record the above stock transactions.
(b) Prepare the stockholders' equity section of the balance sheet for Palmer Corporation
at December 31, 2008. Assume that net income for the year was $100,000 and that
no dividends were declared.
(a) Jan.18 Cash ....................................................................... 1,500,000
Common Stock ............................................... 500,000
Paid-in Capital in Excess of Par Value ........... 1,000,000
Aug.20 Treasury Stock ....................................................... 600,000
Cash ............................................................... 600,000
(To record purchase of 25,000 shares of
Nov. 5 Cash ....................................................................... 252,000
Treasury Stock ............................................... 216,000
Paid-in Capital from Treasury Stock ............... 36,000
(b) Stockholders' equity
Paid-in capital
Capital stock
 Common stock, $10 par value, 400,000 shares
authorized, 300,000 shares issued, and 284,000
shares outstanding $3,000,000
Additional paid-in capital
In excess of par value $2,200,000
From treasury stock 36,000 2,236,000
Total paid-in capital 5,236,000
Retained earnings 700,000
Total paid-in capital and retained earnings 5,936,000
Less: Treasury stock (16,000 shares) (384,000)
Total stockholders' equity $5,552,000
Ex. 166
Tyler Corporation has 100,000 shares of $40 par value preferred stock authorized. During
the year, it had the following transactions related to its preferred stock.
(a) Issued 30,000 shares at $55 per share.
(b) Issued 10,000 shares for equipment having a $700,000 asking price. The stock had a
market value of $60 per share
Instructions
Journalize the transactions.
Solution 166 (5–7 min.)
(a) Cash...................................................................................... 1,650,000
Preferred Stock ............................................................ 1,200,000
Paid-in Capital in Excess of Par Value—Preferred ...... 450,000
(b) Equipment (10,000 × $60)..................................................... 600,000
Preferred Stock ............................................................ 400,000
Paid-in Capital in Excess of Par Value—Preferred ...... 200,000
Ex. 167
Carson Corporation has the following capital stock outstanding at December 31, 2008:
9% Preferred stock, $100 par value, cumulative
15,000 shares issued and outstanding .......................................... $1,500,000
Common stock, no par, $10 stated value, 500,000 shares authorized,
350,000 shares issued and outstanding ........................................ 3,500,000
The preferred stock was issued at $110 per share. The common stock was issued at an
average per share price of $16.
Instructions Prepare the paid-in capital section of the balance sheet at December 31,
2008.
Ex. 168
In its first year of operations, Webber Corporation had the following transactions pertaining
to its $30 par value preferred stock.
Feb. 1 Issued 6,000 shares for cash at $41 per share.
Nov. 1 Issued 3,000 shares for cash at $44 per share.
Instructions
(a) Journalize the transactions.
(b) Indicate the amount to be reported for (1) preferred stock, and (2) paid-in capital in
excess of par value—preferred stock at the end of the year.
Solution 168 (8–12 min.)
(a) Feb. 1 Cash ........................................................................ 246,000
Preferred Stock .............................................. 180,000
Paid-in Capital in Excess of Par Value—Preferred
Stock .............................................................. 66,000
Nov.1 Cash ........................................................................ 132,000
Preferred Stock .............................................. 90,000
Paid-in Capital in Excess of Par Value—Preferred
Stock .............................................................. 42,000
(b) (1) Preferred stock: $180,000 + $90,000 = $270,000.
(2) Paid-in Capital in Excess of Par Value—Preferred Stock: $66,000 + $42,000 =
$108,000.
Ex. 172
The following information is available for Gordon Corporation:
Common stock ($5 par) $500,000
Paid-in capital in excess of par—common 200,000
Retained earnings 360,000
Treasury stock 70,000
Common shares issued 100,000 shares
Common shares outstanding 90,000 shares
Instructions
Based on the preceding information, calculate the book value per share.
Solution 172 (4 min.)
Book value per share = $11/sh. [$500,000 + $200,000 + $360,000 – $70,000]  90,000

Ex. 133
The stockholders' equity section of Ellis Corporation at December 31, 2007, included the following:
 6% preferred stock, $100 par value, cumulative,
10,000 shares authorized, 8,000 shares issued and outstanding ...... $ 800,000
Common stock, $10 par value, 250,000 shares authorized,
200,000 shares issued and outstanding ........................................... $2,000,000
Dividends were not declared on the preferred stock in 2007 and are in arrears.
On September 15, 2008, the board of directors of Ellis Corporation declared dividends on the
preferred stock for 2007 and 2008, to stockholders of record on October 1, 2008, payable on
October 15, 2008. On November 1, 2008, the board of directors declared a $.90 per share dividend
on the common stock, payable November 30, 2008, to stockholders of record on November 15,
2008.
Instructions
Prepare the journal entries that should be made by Ellis Corporation on the dates indicated below:
September 15, 2008 November 1, 2008
October 1, 2008 November 15, 2008
October 15, 2008 November 30, 2008
Solution 133 (12–15 min.)
9/15/08 Retained Earnings ($800,000 × .06 × 2) ............................. 96,000
Preferred Dividends Payable...................................... 96,000
(To record declaration of dividends in arrears and
10/1/08 (No entry required.)
10/15/08 Preferred Dividends Payable .............................................. 96,000
Cash .......................................................................... 96,000
(To record payment of cash preferred dividend)
11/1/08 Retained Earnings .............................................................. 180,000
Common Dividends Payable ...................................... 180,000
11/15/08 (No entry required.)
11/30/08 Common Dividends Payable............................................... 180,000
Cash .......................................................................... 180,000
Ex. 134
Richman Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a
15% stock dividend on June 1 when the market price per share was $12. The shares were issued
on June 30.
Instructions
Prepare the necessary entries for the declaration and payment of the stock dividend.
Solution 134 (6–8 min.)
June 1 Retained Earnings (120,000 × .15 × $12) ........................... 216,000
Common Stock Dividends Distributable ..................... 90,000
Paid-in Capital in Excess of Par Value ....................... 126,000
June 30 Common Stock Dividends Distributable .............................. 90,000
Common Stock .......................................................... 90,000
Ex. 135
Irving Corporation's stockholders' equity section at December 31, 2007 appears below:
Stockholders' equity
Paid-in capital
Common stock, $10 par, 60,000 outstanding $600,000
Paid-in capital in excess of par 150,000
Total paid-in capital $750,000
Retained earnings 150,000
Total stockholders' equity $900,000
On June 30, 2008, the board of directors of Irving Corporation declared a 15% stock dividend,
payable on July 31, 2008, to stockholders of record on July 15, 2008. The fair market value of
Irving Corporation's stock on June 30, 2008, was $15.
On December 1, 2008, the board of directors declared a 2 for 1 stock split effective December 15,
2008. Irving Corporation's stock was selling for $20 on December 1, 2008, before the stock split
was declared. Par value of the stock was adjusted. Net income for 2008 was $190,000 and there
were no cash dividends declared.
Instructions
(a) Prepare the journal entries on the appropriate dates to record the stock dividend and the
stock split.
(b) Fill in the amount that would appear in the stockholders' equity section for Irving
Corporation at December 31, 2008, for the following items:
1. Common stock $____________
2. Number of shares outstanding _____________
3. Par value per share $____________
4. Paid-in capital in excess of par $____________
5. Retained earnings $____________
6. Total stockholders' equity $____________
Solution 135 (12–16 min.)
(a) 6/30/08 Retained Earnings ........................................................ 135,000
Common Stock Dividends Distributable ............... 90,000
Paid-in Capital in Excess of Par ........................... 45,000

7/15/08 (No entry required.)

7/31/08 Common Stock Dividends Distributable ........................ 90,000
Common Stock..................................................... 90,000
12/1/08 (No entry required.)
12/15/08 Memo: 138,000 common shares outstanding $5 par value.
(b) 1. Common stock $ 690,000
2. Number of shares outstanding 138,000
3. Par value per share $ 5
4. Paid-in capital in excess of par $ 195,000
5. Retained earnings $ 205,000
6. Total stockholders' equity $1,090,000
Ex. 136
Derek Corporation was organized on January 1, 2007. During its first year, the corporation issued
40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock.
At December 31, the company declared the following cash dividends:
2007 $10,000
2008 $30,000
2009 $70,000
Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock
dividend is 6% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock
dividend is 8% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2009 using the assumption
of part (b).
Solution 136 (12–17 min.)
(a) Preferred Common Total
2007 $10,000 $ -0- $10,000
2008 12,000 18,000 30,000
2009 12,000 58,000 70,000
(b) Preferred Common Total
2007 $10,000 $ -0- $10,000
2008 22,000 8,000 30,000
2009 16,000 54,000 70,000
(c) Retained Earnings ....................................................................... 70,000
Preferred Dividends Payable .............................................. 16,000
Common Dividends Payable............................................... 54,000
Ex. 137
On November 1, 2008, Lambert Corporation's stockholders' equity section is as follows:
Common stock, $10 par value $ 600,000
Paid-in capital in excess of par value 205,000
Retained earnings 240,000
Total stockholders' equity $1,045,000
On November 1, Lambert declares and distributes a 10% stock dividend when the market value of
the stock is $13 per share.
Instructions
(a) Compute the book value per share (1) before the stock dividend and (2) after the stock
dividend.
(b) Indicate the balances in the stockholders' equity accounts after the stock dividend has been
distributed.
Solution 137 (5–8 min.)
(a) (1) Book value before the stock dividend: $1,045,000 ÷ 60,000 shares = $17.42
(2) Book value after the stock dividend: $1,045,000 ÷ 66,000 shares = $15.83
(b) Common Stock $ 660,000
Paid-in Capital in Excess of Par Value 223,000
Retained Earnings 162,000
Total Stockholders' Equity $1,045,000
Ex. 139
The following information is available for Ellis Corporation:
Common Stock ($5 par) $1,500,000
Retained Earnings 600,000
A 10% stock dividend is declared and paid when the market value was $15 per share.
Instructions
Compute each of the following after the stock dividend.
(a) Total stockholders' equity.
(b) Number of shares outstanding.
(c) Book value per share.
Solution 139 (6–8 min.)
(a) Total stockholders' equity = $2,100,000 ($1,500,000 + $600,000)*
*or ($1,500,000 × 110%) + [($15 – $5) × 30,000] + [$600,000 – (30,000 × $15)]
(b) Number of shares outstanding = 330,000
[($1,500,000  $5) × 110%]

(c) Book value per share = $6.36 ($2,100,000  330,000)

Ex. 140
On January 1, 2008, Bolten Corporation had $2,000,000 of $10 par value common stock
outstanding that was issued at par and retained earnings of $1,000,000. The company issued
200,000 shares of common stock at $13 per share on July 1. On December 15, the board of
directors declared a 10% stock dividend to stockholders of record on December 31, 2008, payable
on January 15, 2009. The market value of Bolten Corporation stock was $15 per share on
December 15 and $16 per share on December 31. Net income for 2008 was $500,000.
Instructions
(1) Journalize the issuance of stock on July 1 and the declaration of the stock dividend on
December 15.
(2) Prepare the stockholders' equity section of the balance sheet for Bolten Corporation at
December 31, 2008.
Solution 140 (10–15 min.)
(1) July 1 Cash ............................................................................. 2,600,000
Common Stock .................................................. 2,000,000
Paid-in Capital in Excess of Par Value .............. 600,000
Dec. 15 Retained Earnings (40,000 × $15/sh)............................ 600,000
Common Stock Dividends Distributable ............. 400,000
Paid-in Capital in Excess of Par Value .............. 200,000

Ex. 141
On January 1, 2008, Dolan Corporation had 60,000 shares of $1 par value common stock issued
and outstanding. During the year, the following transactions occurred:
Mar. 1 Issued 20,000 shares of common stock for $400,000.
June 1 Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
June 30 Paid the $2.00 cash dividend.
Dec. 1 Purchased 4,000 shares of common stock for the treasury for $22 per share.
Dec. 15 Declared a cash dividend on outstanding shares of $2.25 per share to stockholders of
record on December 31.
Instructions
Prepare journal entries to record the above transactions.
Solution 141 (12–17 min.)
Mar. 1 Cash ................................................................................... 400,000
Common Stock .......................................................... 20,000
Paid-in Capital in Excess of Par Value ....................... 380,000
June 1 Retained Earnings .............................................................. 160,000
Dividends Payable ..................................................... 160,000
(80,000 × $2 = $160,000)
June 30 Dividends Payable .............................................................. 160,000
Cash .......................................................................... 160,000
Dec. 1 Treasury Stock ................................................................... 88,000
Cash .......................................................................... 88,000
Dec. 15 Retained Earnings (76,000 × $2.25) ................................... 171,000
Dividends Payable ..................................................... 171,000
Ex. 143
The following information is available for Orson Corporation:
Retained Earnings, December 31, 2008 $1,500,000
Net Income for the year ended December 31, 2009 $ 250,000
The company accountant, in preparing financial statements for the year ending December 31,
2009, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a
machine in 2007 and 2008 using the double-declining-balance method of depreciation. The
bookkeeper neglected to use the straight-line method of depreciation which is the company's
policy. The cumulative effects of the error on prior years was $15,000, ignoring income taxes.
Depreciation was computed by the straight-line method in 2009.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2009.
Solution 143 (12–15 min.)
(a) Accumulated Depreciation........................................................... 15,000
Retained Earnings .............................................................. 15,000
(To adjust for depreciation error in prior periods)
(b) ORSON CORPORATION
Retained Earnings Statement
For the Year Ended December 31, 2009
————————————————————————————————————————
Balance January 1, as reported ............................................................... $1,500,000
Correction for overstatement of depreciation in prior period .................... 15,000
Balance, January 1, as adjusted .............................................................. 1,515,000
Add: Net income ..................................................................................... 250,000
Balance, December 31 ............................................................................ $1,765,000
Ex. 144
The following information is available for Sanders Inc.:
Beginning retained earnings $600,000
Cash dividends declared 50,000
Net income for 2008 120,000
Stock dividend declared 10,000
Understatement of last year's depreciation expense 40,000
Instructions
Based on the preceding information, prepare a retained earnings statement for 2008.
Solution 144 (10 min.)
SANDERS INC.
Retained Earnings Statement
For the Year Ended December 31, 2008
Beginning balance $600,000
Correction for overstatement of 2007 net income (40,000)
Beginning balance, as adjusted 560,000
Add: Net income 120,000
680,000
Less: Cash dividends $50,000
Stock dividends 10,000 60,000
Ending balance $620,000
Ex. 145
On January 1, 2008, Windom Corporation had Retained Earnings of $378,000. During the year,
Windom had the following selected transactions:
1. Declared stock dividends of $40,000.
2. Declared cash dividends of $90,000.
3. A 2 for 1 stock split involving the issuance of 200,000 shares of $5 par value common stock
for 100,000 shares of $10 par value common stock.
4. Suffered a net loss of $70,000.
5. Corrected understatement of 2007 net income because of an inventory error of $68,000.
Instructions
Prepare a retained earnings statement for the year.

Ex. 150
At December 31, 2008, Rossi Company has $500,000 of $100 par value, 8%, cumulative preferred
stock outstanding and $2,000,000 of $10 par value common stock issued. Rossi's net income for
the year is $500,000.
Instructions
Compute earnings per share of common stock for 2008 under the following independent situations.
(Round to two decimals.)
(a) The dividend to preferred stockholders was declared, and there has been no change in the
number of shares of common stock outstanding during the year.
(b) The dividend to preferred stockholders was not declared, and 10,000 shares of common
treasury stock were held throughout the year. The preferred stock is cumulative.
Solution 150 (9–12 min.)
(a) ($500,000 – $40,000) ÷ 200,000 = $2.30
(b) ($500,000 – $40,000) ÷ 190,000 = $2.42
200,000 – 10,000 = 190,000
(Dividends on preferred stock that are cumulative must be deducted in the numerator, even if not
declared.)
Ex. 151
The following information is available for Vincent Corporation:
Dividends paid to common stockholders $ 45,000
Dividends paid to preferred stockholders 20,000
Net income 145,000
Weighted average common shares outstanding 100,000
Instructions
Compute the earnings per share of common stock.
Solution 151 (4 min.)
Earnings per share = $1.25 [($145,000 – $20,000)  100,000]

On January 1, 2010, Carolinas Corporation had the following stockholders’ equity accounts.
Common Stock ($20 par value, 60,000 shares issued and outstanding) $1,200,000
Paid-in Capital in Excess of Par Value 200,000
Retained Earnings 600,000
During the year, the following transactions occurred.
Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15,
payable March 1.
Mar. 1 Paid the dividend declared in February.
Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36.
July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable July
31. On July 1, the market price of the stock was $13 per share.
31 Issued the shares for the stock dividend.
Dec. 1 Declared a $0.50 per share dividend to stockholders of record on December 15, payable
January 5, 2011.
31 Determined that net income for the year was $350,000.
Instructions
(a) Journalize the transactions and the closing entry for net income.