Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

EXERCISE 11-2

Purpose: (L.O. 1, 7) This exercise will review the meaning of some important terminology related to the area of stockholders' equity.

A corporation's common stock may have a par value or it may be a no-par stock. A no-par stock may or may not have a stated value.

The five different situations described below are examples of the various ways stockholders' equity may be structured:

1. Zollo Corporation has 100,000 authorized shares of $10 par value common stock. 60,000 shares were issued at an average price of $33 each. The balance of retained earnings at December 31, 2014 is $630,000.
2. Oiler Corporation has 50,000 authorized shares of no-par common stock. The stock has a stated value of $1 per share. 10,000 shares were issued at an average price of $25 each. The balance of retained earnings at December 31, 2014 is $140,000.
3. Kelly Corporation has 100,000 authorized shares of no-par common stock with no stated value. All of the 40,000 issued shares were sold for $24 each. The balance of retained earnings at December 31, 2014 is $300,000.
4. Scotty Corporation has 100,000 authorized shares of $40 par common stock. 70,000 shares were issued at an average price of $68. 6,000 of these shares were reacquired and are currently held in the treasury; they were purchased for $60 each. The balance of retained earnings at December 31, 2014 is $1,500,000.
5. Grennan Corporation has 200,000 authorized shares of $10 par common stock and 100,000 authorized shares of $100 par preferred stock. ...