Mata kuliah : F0024 – Pengantar Akuntansi II Tahun : 2010 CH 14 CORPORATIONS: DIVIDENDS, RETAINED EARNINGS, AND INCOME REPORTING Lecture 11, 12, 13, 14

QUESTIONS a. What is a dividend? b. Dividends must be paid in cash. Do you agree? Explain. 17. Why must preferred stock dividends be subtracted from net income in computing earnings per share? Bina Nusantara University

P14-2A The stockholders’ equity accounts of Hashmi Company at January 1, 2010, are as follows. There were no dividends in arrears on preferred stock. During 2010, the company had the following transactions and events. $ Preferred Stock, 6%, $50 par 600,000 Common Stock, $5 par 800,000 Paid-in Capital in Excess of Par Value-Preferred Stock 200,000 Paid-in Capital in excess of Par Value-Common Stock 300,000 Retained Earnings Bina Nusantara University

P14-2A July 1 Declared a $0.50 cash dividend on common stock. Aug. 1 Discovered $25,000 understatement of 2009 depreciation. Ignore income taxes. Sept. 1 Paid the cash dividend declared on July 1. Dec. 1 Declared a 10% stock dividend on common stock when the market value of the stock was $18 per share. 15 Declared a 6% cash dividend on preferred stock payable January 15, 2011. 31 Determined that net income for the year was $355,000. 31 Recognized a $200,000 restriction of retained earnings for plant expansion. Bina Nusantara University

P14-2A Journalize the transactions, events, and closing entry. Enter the beginning balances in the accounts, and post to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed). Prepare a retained earnings statement for the year. Prepare a stockholders’ equity section at December 31, 2010. Bina Nusantara University

P14-4A On January 1, 2010, Pattini 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 occured. Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1. Bina Nusantara University

P14-4A Mar. 1 Paid the dividend declared in February. Apr. 1 Announced a 4-for-1 stock split. Prior to the split, the market price per share was $36. July 1 Declared a 5% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $13 per share. July 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2011. Bina Nusantara University

P14-4A Dec. 31 Determined that net income for the year was $350,000. Instructions: Prepare the stockholders’ equity section of the balance sheet at: March 31 June 30 September 30 December 31, 2010 Bina Nusantara University