Chapter 11 - Reporting and Interpreting Owners’ Equity
E11–14. Req. 1
Stockholders’ Equity
Contributed capital:
Common stock, authorized 100,000 shares, issued 34,000 shares, of
which 2,000 shares are held as treasury stock .................................. Capital in excess of par ........................................................................ Total contributed capital .................................................................... Retained earnings ................................................................................... Total .................................................................................................. Less: Cost of treasury stock ................................................................. Total Stockholders’ Equity Req. 2
The dividend yield ratio is 2.24% ([$16,000 32,000 shares] $22.29). While this yield seems small, it is a typical return on common stock. Investors receive a return from both dividends and stock price appreciation.
Treasury stock does not receive dividends. As a result, dividends should be paid on 32,000 shares. E11–15.
Req. 1
a. Treasury stock (200 shares x $20) (+XSE, -SE) ................... Cash (-A) ........................................................................... Bought treasury stock. b.
Cash (40 shares x $25) (+A) ................................................. Treasury stock(40 shares x $20) (-XSE, +SE) .................. Capital in excess of par (+SE) ........................................... Sold treasury stock.
Capital in excess of par (-SE) ............................................... Treasury stock (30 shares x $20) (-XSE, +SE) ................ Sold treasury stock.
4,000
1,000
450 150
4,000
800 200
600
$680,000 163,000 843,000 89,000 932,000 25,000 c. Cash (30 shares x $15) (+A) .................................................
Req. 2
It is not possible to make a ―profit‖ or ―loss‖ on treasury stock transactions. Therefore, these transactions do not affect the income statement.