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(A) Reproduce The Retained Earnings Account For 2012. Solution: Retained Earnings Account

The document provides stockholders' equity accounts and related transactions for Violet Corporation and Saa Corporation during 2012. For Violet Corporation, it includes the retained earnings account, a retained earnings statement, and stockholders' equity section. For Saa Corporation, it provides the stockholders' equity section at various dates during the year based on transactions that occurred.

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Qasim Khan
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63 views

(A) Reproduce The Retained Earnings Account For 2012. Solution: Retained Earnings Account

The document provides stockholders' equity accounts and related transactions for Violet Corporation and Saa Corporation during 2012. For Violet Corporation, it includes the retained earnings account, a retained earnings statement, and stockholders' equity section. For Saa Corporation, it provides the stockholders' equity section at various dates during the year based on transactions that occurred.

Uploaded by

Qasim Khan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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P14-3A The post-closing trial balance of Violet Corporation at December 31, 2012, contains

the following stockholders’ equity accounts.

(a) Reproduce the Retained Earnings account for 2012.


Solution:

Retained Earnings account


Sept. 1 Prior Per. Adj. 63,000 Jan. 1 Balance 1,170,000

Oct. 1 Cash Dividend 250,000 Dec. 31 Net Income 585,000

Dec. 31 Stock Dividend 400,000


Dec. 31 Balance 1,042,000

b) Prepare a retained earnings statement for 2012.


Solution
Violet Corporation
Retained Earnings Statement
For the Year Ended December 31, 2012

Balance, January 1, as reported $1,170,000


Correction of overstatement of 2007 net
income because of understatement of
depreciation (63,000)

Balance, January 1, as adjusted 1,107,000

Add: Net income 585,000


1,692,000

Less: Cash dividends $250,000


Stock dividends 400,000 650,000
Balance, December 31 $1,042,000

c) Prepare a stockholders’ equity section at December 31, 2012.

Solution
Violet Corporation
stockholders’ equity section
For the Year Ended December 31, 2012

Stockholders’ equity
Paid-in capital
Capital stock
6% Preferred stock,
$50 par value, cumulative,
20,000 shares authorized,
15,000 shares issued and
Outstanding $ 750,000
Common stock, $10 par value,
500,000 shares authorized,
250,000 shares issued and
Outstanding $2,500,000
Common stock dividends
Distributable 250,000 2,750,000
Total capital stock 3,500,000
Additional paid-in capital
In excess of par value preferred stock 250,000
In excess of par value common stock 400,000
Total additional paid-in capital 650,000
Total paid-in capital 4,150,000
Retained earnings 1,042,000
Total stockholders’ equity $5,192,000
(d) Compute the allocation of the cash dividend to preferred and common
stock.
Solution:
15,000 X $3 = $45,000

$585,000 – $45,000 = $2.25


240,000

(e) Compute the earnings per share of common stock using 240,000 as the weighted-
average
shares outstanding for the year.
Solution:

Total cash dividend $250,000


Allocated to preferred stock
Dividend in arrears—2007 $45,000
(15,000 X $3)
2008 dividend 45,000 90,000
Remainder to common stock $160,000
P14-4A On January 1, 2012, Saa Corporation had the following
stockholders’ equity accounts. Common Stock (no par value, 90,000
shares issued and outstanding) $1,400,000
Retained Earnings 500,000.
During the year, the following transactions occurred

Prepare the stockholders’ equity section of the balance sheet at:


(a) March 31
Solution
Saa Corporation
Partial Balance Sheet
March 31, 2012

Stockholders’ equity
Paid-in capital
Capital stock
Common stock, no-par value,
90,000 shares issued and outstanding. $1,400,000
Retained earnings 410,000
Total stockholders’ equity $1,810,000

(b) June 30,

Solution
Saa Corporation
Partial Balance Sheet
June 30, 2012

Stockholders’ equity
Paid-in capital
Capital stock
Common stock, no-par value,
360,000 shares issued and outstanding. $1,400,000
Retained earnings 410,000
Total stockholders’ equity $1,810,000
c) September 30,

Solution:
Saa Corporation
Partial Balance Sheet
September 30, 2012

Stockholders’ equity
Paid-in capital
Capital stock
Common stock, no-par value,
378,000 shares issued and outstanding $1,634,000
Retained earnings 176,000

Total stockholders’ equity $1,810,000

(c)December 31, 2012.


Solution

Saa Corporation
Partial Balance Sheet
December 31, 2012
Stockholders’ equity
Paid-in capital
Capital stock
Common stock, no-par value,
378,000 shares issued and outstanding $1,634,000
Retained earnings 337,000

Total stockholders’ equity $1,971,000

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