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ACC 291 Learning Team Study Guide Week 4 – PaperScholar Study Aids
Guide Last Updated: October 9, 2015
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ACC 291 Learning Team Study Guide Week 4 –

ACC 291 Learning Team Study Guide Week 4


 

Complete the two assigned learning team problems found in the Week 4 Microsoft® Excel® template provided in the Course Materials forum.

Submit the completed Microsoft® Excel® template to the Assignments Tab.

 

Problem 1 On October 31, the stockholders’ equity section of Omar Company
consists of common stock $600,000 and retained earnings $900,000. Omar is
considering the following two courses of action: (1) declaring a 5% stock
dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a
2-for-1 stock split that will reduce par value to $5 per share. The current
market price is $14 per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the
components of stockholders’ equity and outstanding shares.

 

 

Problem 2 Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%,
noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation
assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the
following balances pertaining to stockholders’ equity.
Preferred Stock $ 240,000
Paid-in Capital in Excess of Par Value—Preferred 56,000
Common Stock 2,000,000
Paid-in Capital in Excess of Stated Value—Common 5,700,000
Treasury Stock—Common (1,000 shares) 22,000
Paid-in Capital from Treasury Stock 3,000
Retained Earnings 560,000
The preferred stock was issued for land having a fair market value of $296,000.All common stock
issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury
at a per share cost of $22. In December, 500 shares of treasury stock were sold for $28 per share.
No dividends were declared in 2011.
Instructions
(a) Prepare the journal entries for the:
(1) Issuance of preferred stock for land.
(2) Issuance of common stock for cash.
(3) Purchase of common treasury stock for cash.
(4) Sale of treasury stock for cash.
(b) Prepare the stockholders’ equity section at December 31, 2011.