1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
allochka39001 [22]
3 years ago
6

Riverbed Company reported the following amounts in the stockholders’ equity section of its December 31, 2019, balance sheet. Pre

ferred stock, 11%, $100 par (10,000 shares authorized, 2,100 shares issued) $210,000 Common stock, $5 par (104,500 shares authorized, 20,900 shares issued) 104,500 Additional paid-in capital 135,000 Retained earnings 492,000 Total $941,500 During 2020, Riverbed took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2019 $11 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2019. 2. Purchased 1,600 shares of its own outstanding common stock for $39 per share. Riverbed uses the cost method. 3. Reissued 700 treasury shares for land valued at $28,700. 4. Issued 530 shares of preferred stock at $107 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $41 per share. 6. Issued the stock dividend. 7. Declared the annual 2020 $11 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2021.
a. Prepare journal entries to record the transactions described above.
b. Prepare the December 31, 2020, stockholders’ equity section. Assume 2020 net income was $334,600.
Business
1 answer:
kupik [55]3 years ago
6 0

Answer:

Riverbed Company

a) Journal Entries during 2020:

1. Debit Dividends Payable - Preferred Stock with $23,100

Debit Dividends Payable - Common Stock with $41,500

Credit Cash Account with $64,900

To record the payment of dividends.

2. Debit Treasury Stock with $62,400

Credit Cash Account with $62,400

To record the repurchase of 1,600 shares of common stock for $39 per share, using the cost method.

3. Debit Land Account with $28,700

Credit Treasury Stock with $28,700

To record the reissue of 700 treasury shares for land.

4. Debit Cash account with $56,710

Credit Preferred Stock with $53,000

Credit Additional Paid-in Capital- Preferred with $3,710

To record the issue of 530 shares of preferred stock at $107 per share.

5. Debit Stock Dividend with $10,000

Credit Dividends Payable with $10,000

To record the declaration of 10% stock dividend on outstanding common stock.

6. Debit Dividends Payable with $10,000

Credit Common Stock with $10,000

To record the issue of stock dividend.

7. Debit Dividends - Preferred with $28,930

Debit Dividends - Common Stock with $44,000

Credit Dividends Payable with $72,930

To record declaration of $11 per share dividend on preferred stock and $2 on common stock.

b) Stockholders' Equity Section of the Balance Sheet:

Preferred Stock:

Authorized, 10,000 at $100 par = $0

Issued and paid up, 2630 at $100 = $263,000

Additional Paid-in Capital - Preferred = $3,710

Common Stock:

Authorized 104,500 at $5 par value = $0

Issued and Paid up, 22,900 at $5 = $114,500

Less Treasury Stock, 900 shares = $33,700

Additional Paid-in Capital - Common = $135,000

Retained Earnings = $753,670 ($492,000 + 334,600 - 72,930)

Total = $1,236,180

Explanation:

1. The authorized stock does not form part of the value of equity.  This is why, for this case, a nominal value of $0 was assigned.  The authorized stock represents the maximum number of shares the company is legally authorized to issue.

2. The 2019 annual dividends paid were based on 2,100 shares issued for preferred and 20,00 shares for the common stock.

3. Treasury Stock is used to record the repurchase of own stock.  Based on the cost method, the total costs of issue and repurchase are recorded in the Treasury Stock without the above-par value being taken to the Additional Paid-in Capital.  The reissue of treasury stock for land does not affect the Cash Account.  The debit entry is to the Land Account.

4. Stock dividend declared and issued was calculated based on the outstanding balance at that time.  The outstanding totalled 20,000 shares.  10% of 20,000 equals 2,000.  This implies that additional stock was granted to stockholders as dividend.  The market price does not have to be taken into account in Riverbed.

5. Dividends declared on preferred stock was $11 per share.  The preferred stock at the time was 2,630 (2,100 + 530) after the issue of additional 530 shares of preferred stock.

6. The Retained Earnings are adjusted for net income and dividends declared for the year.  Note: The payment of dividend for 2019 does not affect the Retained Earnings.

You might be interested in
A landowner in Texas is offered $200,000 for the exploration rights to oil on her land, along with a 25% royalty on the future p
Shtirlitz [24]

Answer:

b. She should develop herself as the EMV of developing is $1.125 million, which is higher than the EMV of selling.

Explanation:

The probability of discovered oil = 0.25 (25%)

Selling the exploration right= Selling Price + Probability of discovered oil × Royalty% × Future Profit

= $200,000 + 0.25 × 0.25 × $7,500,000 = $668,750

Developing = Probability of finding the oil × Future Profits - Cost of Well

= 0.25 × $7,500,000 - $750,000 = $1,125,000

= $1.125 million

Therefore the EMV for selling the exploration rights is less than the developing, the landowner will develop the site by his own.

4 0
2 years ago
In the acronym SMART, what does the “M” stand for?
elena-14-01-66 [18.8K]

Answer:

measurable

Explanation:

defining a hypothesis

7 0
3 years ago
Read 2 more answers
Riverbed Company designated Jill Holland as petty cash custodian and established a petty cash fund of $236. The fund is reimburs
11Alexandr11 [23.1K]

Answer:

The journal entry is shown below:

Explanation:

According to the scenario, the journal entries for the given data are as follows:

Petty cash A/c Dr  $236

To Cash A/c $236  

(Being establishment of the fund is recorded )

Office supplies A/c Dr  $94

Misc. Expense A/c Dr $89

Cash Over / Short Dr $22             ( $236 - $31 - $89 - $94)

To Cash A/c  $205                        ( $236 - $31)

(Being Reimbursement of the fund is recorded)

5 0
3 years ago
Which of the following is an individual characteristic of employees that improves individual mechanisms such as stress and motiv
otez555 [7]

Answer: C) Personality

Explanation:

Personality is an individuals quality that helps them succeed in life. If you improve your personality you can control stress and increase your motivation.

7 0
3 years ago
Explain why the monopsonist's marginal-revenue-product curve is downward sloping. Include the role of the price for the final go
alekssr [168]

Answer:

A monopsony is market where there is only one buyer, e.g. the government is the sole buyer for nuclear submarines in the US.

The demand curve of a monopsony is similar to the demand curve of any other type of market, i.e. it is downward sloping. Since there is only 1 buyer, the demand curve is also the supply curve. If the monopsonist wants to increase the quantity demanded at a lower price, the supplier (or suppliers) must be able to lower its costs and that generally results in lower labor costs.

3 0
2 years ago
Other questions:
  • Which of the following is a guideline for managers to evaluate employees?
    15·1 answer
  • How might a trade deal that allows two nations to freely exchange goods affect the circular flow of income? Neither country is l
    5·1 answer
  • Suppose a state lottery prize of $8 million is to be paid in 5 payments of $1,600,000 each at the end of each of the next 5 year
    9·1 answer
  • During the annual planning meeting, Anastasia, president of a Fortune 500 company, discussed with the upper management the strat
    7·1 answer
  • Trek Bicycle purchases only the highest quality raw materials to make products that will live up to its mission to "Build the be
    11·1 answer
  • Are leadership and management the same thing?
    8·1 answer
  • On October 5, your company buys and receives inventory costing $5,000, on terms 2/30, n/60. On October 20, your company pays the
    5·1 answer
  • For each of the following situations, identify the type of form to be filed with the SEC for disclosure purposes (2 points): (A)
    8·1 answer
  • A local university has a goal of raising $500,000 for an escrow account. Their fund-raising committee has committed to raising $
    12·1 answer
  • a manager's reluctance to delegate, as seen in the video, relates to which of the four management functions?
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!