Demonstration problem

Demonstration problem A Wylie Corporation has outstanding 10,000 shares of USD 150 par value common stock.

Prepare the entries to record:

a. The declaration of a cash dividend of USD 1.50 per share.

b. The declaration of a stock dividend of 10 percent at a time when the market value per share is USD 185.

c. The declaration of a stock dividend of 40 percent at a time when the market value per share is USD 195.


Demonstration problem B Following are selected transactions of Brackett Company:

  • The company reacquired 200 shares of its own USD 100 par value common stock, previously issued at USD 105 per share, for USD 20,600.

  • Fifty of the treasury shares were reissued at USD 110 per share, cash.

  • Seventy of the treasury shares were reissued at USD 95 per share, cash.

  • Stockholders of the corporation donated 100 shares of their common stock to the company.

  • The 100 shares of treasury stock received by donation were reissued for USD 9,000.

    • Prepare the necessary journal entries to record these transactions.


Demonstration problem C Selected account balances of Nexis Corporation at 2010 December 31, are:

Common stock (nor par value; 100,000 shares authorized, issued, and outstanding; stated value of USD 20 per share USD 2,000,000
Retained earnings 570,000
Dividends payable (in cash, declared December 15 on preferred stock) 16,000
Preferred stock (8 percent, par value USD 200; 1,000 shares authorized, issued, and outstanding) 200,000
Paid-In capital from donation of plant site 100,000
Paid-in capital in excess of par value – preferred 8,000


Present in good form the stockholders' equity section of the balance sheet.

Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41429/mod_resource/content/15/AccountingPrinciples2.pdf
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