Problem 11-2A The stockholders\' equity accounts of Cyrus Corporation on January
ID: 2532759 • Letter: P
Question
Problem 11-2A The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Preferred Stock (7%, $100 par noncumulative, 5,000 shares authorized) Common Stock ($4 stated value, 300,000 shares authorized) Paid-in Capital in Excess of Par Value-Preferred Stock Paid-in Capita in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock (5,000 common shares) $300,000 1,000,000 15,000 480,000 688,000 40,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. Issued 5,000 shares of common stock for $30,000 Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1 Nov. 1 Paid the dividend declared on October 1 Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017 Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1 Your answer is partially correct. Try again. Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.) (Record entries in the order displayed in the problem statement. Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Feb. 1Cash 30000 Common Stock 20000 Paid-in Capital in Excess of Stated Value-Common Stock 10000 Mar. 20Treasury Stock Cash 7000 Oct. 1 : Dividends Expense 21000 Dividends Payable 21000 Nov. 1 Dividends Payable 21000 Cash 21000 Dec. 1 Cash Dividends 124500 Dividends Payable 124500 Dec. 31 Income Summary 280000 Retained Earnings 280000 To record net income) Dec. 31 Retained Earnings 145500 Dividends Payable 45500 (To close cash dividends) Dec. 31 Dividends Payable 127500 Cash 127500 To record payment of cash dividends payable)Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Feb Cash 30,000.00 Common Stock 20,000.00 5,000 shares X $4 Paid in Capital in excess of Stated Value - Common Stock 10,000.00 5,000 shares X $2 (To record the issue of common Stock) 20-Mar Treasury Stock 7,000.00 1,000 shares X $7 Cash 7,000.00 1,000 shares X $7 (to record the purchase of treasury stock) 1-Oct Cash Dividends 21,000.00 $300,000 X 7% Dividends Payable 21,000.00 (to record the dividend declared on preferred stock) 1-Nov Dividends Payable 21,000.00 Cash 21,000.00 (to record the dividends paid) 1-Dec Cash Dividends 124,500.00 249,000 Shares X $0.50 Dividends Payable 124,500.00 (to record the dividend declared on common stock) 31-Dec Income Summary 280,000.00 Retained Earnings 280,000.00 (To record Net Income) 31-Dec Retained Earnings 145,500.00 Cash Dividends 145,500.00 (To close cash dividends) 31-Dec Dividends Payable 124,500.00 Cash 124,500.00 (To record payment of cash dividends payable) Answer 2. Preferred Stock Common stock Paid in Capital in excess of Par Value- Preferred Stock Beg. Bal. 300,000.00 Beg. Bal. 1,000,000.00 Beg. Bal. 15,000.00 20,000.00 1-Feb End. Bal. 300,000.00 End. Bal. 1,020,000.00 End. Bal. 15,000.00 Paid in Capital in excess of Stated Value - Common Stock Retained Earnings Treasury Stock Beg. Bal. 480,000.00 Beg. Bal. 688,000.00 Beg. Bal. 40,000.00 10,000.00 1-Feb 31-Dec 145,500.00 280,000.00 31-Dec 20-Mar 7,000.00 End. Bal. 490,000.00 End. Bal. 822,500.00 End. Bal. 47,000.00 Cash Dividends Dividends Payable 1-Oct 21,000.00 145,500.00 31-Dec 1-Nov 21,000.00 21,000.00 1-Oct 1-Dec 124,500.00 31-Dec 124,500.00 124,500.00 1-Dec End. Bal. - End. Bal. - Answer 3. CYRUS CORPORATION Partial Balance Sheet Dec 31, 2017 Stockholders' Equity Capital Stock Preferred Stock (7%, $100 Par, Noncummulative, 5,000 shares Autorized and 3,000 shares Issued) 300,000.00 Common Stock ($4 stated Value, 300,000 shares authorized and 255,000 shares Issued) 1,020,000.00 Total Capital Stock 1,320,000.00 Additional Paid-in Capital: Paid in Capital in excess of Par Value- Preferred Stock 15,000.00 Paid in Capital in excess of Stated Value - Common Stock 490,000.00 Total Additional Paid-in Capital 505,000.00 Total Paid-in Capital 1,825,000.00 Retained Earnings 822,500.00 Total Paid-in Capital & Retained Earnings 2,647,500.00 Treasury Stock (6,000 Shares) (47,000.00) Total Stockholders' Equity 2,600,500.00 Answer 4. Payout Ratio = Total Dividend Paid / Net Income Payout Ratio = $124,500 / $280,000 Payout Ratio = 44.46% (Approx.) Earning Per Share = ($280,000 - $21,000) / [(245,0000 + 249,000)/2] Earning Per Share = $259,000 / 247,000 shares Earning Per Share = $1.05 per share (Approx.) Return on Common Stockholders' Equity = ($280,000 - $21,000) / $2,206,750 Return on Common Stockholders' Equity = 11.74% (Approx.) Beginning Common Stockholders' Equity = $1,000,000 + $480,0000 + $688,000 - $40,000 = $2,128,000 Ending Common Stockholders' Equity = $1,020,000 + $490,0000 + $822,500 - $47,000 = $2,285,500 Average Common Stockholders' Equity = ($2,128,000 + $2,285,500) / 2 = $2,206,750