Chapter 11 - Reporting and Interpreting Owners’ Equity
MINI- EXERCISES
M11–1.
Stockholders may:
a) Vote in the stockholders’ meeting (or by proxy) on major issues concerning management of the corporation. b) Participate proportionately with other stockholders in the distribution of the corporation’s profits. c) Share proportionately with other stockholders in the distribution of corporate assets upon liquidation.
Being able to vote is the most important of the rights because this ensures that the owners have an input at the stockholders’ meeting and some control of the management of the corporation, thus enabling them to protect their rights as stockholders. M11–2.
Unissued shares = 90,000 (268,000 – 178,000) M11–3.
Cash (170,000 $21) (+A) ...........................................3,570,000
Common Stock (170,000 $1) (+SE) ......................
Capital in Excess of Par (+SE) .................................
The journal entry would be different if the par value were $2:
Cash (170,000 $21) (+A) ...........................................3,570,000
Common Stock (170,000 $2) (+SE) ......................
Capital in Excess of Par (+SE) .................................
340,000 3,230,000
170,000 3,400,000