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

3. 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

4. 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

5. 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, Determined that net income for the year was $355, Recognized a $200,000 restriction of retained earnings for plant expansion.
Bina Nusantara University

6. 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

7. 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

8. 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

9. 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