Scizzory Corporation
Discipline: Business Studies
Type of Paper: Journal article
Academic Level: High school
Paper Format: APA
Question
Need help with
how to prepare these 2 problems.
EXERCISES 13-3
Prepare journal entries to record the following four separate issuances of
stock:
1. Two thousand shares of no-par common stock are issued to the corporation's
promoters in exchange
for their efforts, estimated to be worth $30,000. The stock has no stated value.
2. Two thousand shares of no-par common stock are issued to the corporation's
promoters in exchange
for their efforts, estimated to be worth $30,000. The stock has a $1 per share
stated value.
3. Four thousand shares of $10 par value common stock are issued for $70,000
cash.
4. One thousand shares of $100 par value preferred stock are issued for
$120,000 cash.
EXERCISES 13-7
On June 30, 2005, Scizzory
Corporation's common stock is priced at $31 per share before any stock dividend
or split, and the stockholders' equity section of its balance sheet appears as
follows:
Common stock?$10 par value,
60,000 shares
authorized, 25,000 shares issued and outstanding . . . . . . . . . . . .
$250,000
Contributed capital in excess of par value, common stock . . . . . . . 100,000
Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 350,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 330,000
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . $680,000
1. Assume that the company
declares and immediately distributes a 100% stock dividend. This event is
recorded by capitalizing retained earnings equal to the stock's par value.
Answer these questions about stockholders' equity as it exists after issuing
the new shares:
a. What is the retained earnings balance?
b. What is the amount of total stockholders' equity?
c. How many shares are outstanding?
2. Assume that the company implements a 2-for-1 stock split instead of the
stock dividend in part 1.
Answer these questions about stockholders' equity as it exists after issuing
the new shares:
a. What is the retained earnings balance?
b. What is the amount of total stockholders' equity?
c. How many shares are outstanding?
3. Explain the difference, if any, to a stockholder from receiving new shares
distributed under a large
stock dividend versus a stock split.
Check (1b) $680,000
(2a) $330,000