Brief Exercise 15-4 Ravonette Corporation issued 375 shares of $15 par value common stock and 110 shares of $48 par value preferred stock for a lump sum of $20,025. The common stock has a market price of $30 per share, and the preferred stock has a market price of $100 per share. Prepare the journal entry to record the issuance. (Round answers to 0 decimal places, e.g., 1520. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Cash 20025 Preferred Stock Paid-in Capital in Excess of Par - Preferred Stock Common Stock Paid-in Capital in Excess of Par - Common Stock Exercise 15-12 Lotoya Davis Corporation has 10.12 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 62 cents per share cash dividend to stockholders of record as of June 14, payable June 30. (a) Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 6/1 6/14 6/30 (b) How would the entry differ if the dividend were a liquidating dividend? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Warning Exercise 15-19 Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,418,100. Jana Kingston Co. Mary Ann Benson Co. Current liabilities $315,600 Current liabilities $754,600 Long-term debt, 10% 1,281,000 Common stock ($20 par) 2,945,000 Common stock ($20 par) 2,103,000 Retained earnings (Cash dividends, $328,900) 718,500 Retained earnings (Cash dividends, $227,700) 718,500 $4,418,100 $4,418,100 For the year, each company has earned the same income before interest and taxes. Jana Kingston Co. Mary Ann Benson Co. Income before interest and taxes $1,203,000 $1,203,000 Interest expense 128,100 0 1,074,900 1,203,000 Income taxes (45%) 483,705 541,350 Net income $591,195 $661,650 At year end, the market price of Kingston’s stock was $101 per share, and Benson’s was $63.50. Assume balance sheet amounts are representative for the entire year. (a) Calculate the return on total assets? (Round answers to 2 decimal places, e.g. 16.85%.) Return on total assets Kingston Company % Benson Company % Which company is more profitable in terms of return on total assets? (b) Calculate the return on common sto ...

1. Brief Exercise 15-4
Ravonette Corporation issued 375 shares of $15 par value
common stock and 110 shares of $48 par value preferred stock
for a lump sum of $20,025. The common stock has a market
price of $30 per share, and the preferred stock has a market
price of $100 per share.
Prepare the journal entry to record the issuance. (Round
answers to 0 decimal places, e.g., 1520. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Cash
20025
Preferred Stock
Paid-in Capital in Excess of Par - Preferred Stock
Common Stock
Paid-in Capital in Excess of Par - Common Stock
Exercise 15-12
Lotoya Davis Corporation has 10.12 million shares of common
stock issued and outstanding. On June 1, the board of directors

2. voted an 62 cents per share cash dividend to stockholders of
record as of June 14, payable June 30.
(a) Prepare the journal entry for each of the dates above
assuming the dividend represents a distribution of earnings.
(Credit account titles are automatically indented when amount
is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
Date
Account Titles and Explanation
Debit
Credit
6/1
6/14
6/30

3. (b) How would the entry differ if the dividend were a
liquidating dividend? (Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Warning
Exercise 15-19
Shown below is the liabilities and stockholders’ equity section
of the balance sheet for Jana Kingston Company and Mary Ann
Benson Company. Each has assets totaling $4,418,100.
Jana Kingston Co.
Mary Ann Benson Co.
Current liabilities
$315,600
Current liabilities
$754,600
Long-term debt, 10%
1,281,000
Common stock ($20 par)

4. 2,945,000
Common stock ($20 par)
2,103,000
Retained earnings (Cash dividends, $328,900)
718,500
Retained earnings (Cash dividends, $227,700)
718,500
$4,418,100
$4,418,100
For the year, each company has earned the same income before
interest and taxes.
Jana Kingston Co.
Mary Ann Benson Co.
Income before interest and taxes
$1,203,000
$1,203,000

5. Interest expense
128,100
0
1,074,900
1,203,000
Income taxes (45%)
483,705
541,350
Net income
$591,195
$661,650
At year end, the market price of Kingston’s stock was $101 per
share, and Benson’s was $63.50. Assume balance sheet amounts
are representative for the entire year.
(a) Calculate the return on total assets? (Round answers to 2
decimal places, e.g. 16.85%.)
Return on total assets
Kingston Company
%
Benson Company

6. %
Which company is more profitable in terms of return on total
assets? (b) Calculate the return on common stock equity?
(Round answers to 2 decimal places, e.g. 16.85%.)
Return on common stockequity
Kingston Company
%
Benson Company
%
Which company is more profitable in terms of return on
common stock equity? (c) Calculate the Net income per share.
(Round answers to 2 decimal places, e.g. $6.85.)
Net income per share
Kingston Company
$
Benson Company
$
Which company has the greater net income per share of stock?
Neither company issued or reacquired shares during the
year. (d1) From the point of view of net income, is it
advantageous to the stockholders of Jana Kingston Co. to have
the long-term debt outstanding?

7. (e) What is the book value per share for each company? (Round
answers to 2 decimal places, e.g. $6.85.)
Book value per share
Kingston Company
$
Benson Company
$
Ok
Cancel
Problem 15-3
Hatch Company has two classes of capital stock
outstanding: 8%, $20 par preferred and $5 par common. At
December 31, 2014, the following accounts were included in
stockholders’ equity.
Preferred Stock, 155,900 shares
$ 3,118,000
Common Stock, 2,023,000 shares
10,115,000
Paid-in Capital in Excess of Par—Preferred Stock
204,300
Paid-in Capital in Excess of Par—Common Stock
28,050,000

8. Retained Earnings
4,507,000
The following transactions affected stockholders’ equity during
2015.
Jan. 1
31,500 shares of preferred stock issued at $23 per share.
Feb. 1
59,400 shares of common stock issued at $21 per share.
June 1
2-for-1 stock split (par value reduced to $2.50).
July 1
37,000 shares of common treasury stock purchased at $9 per
share. Hatch uses the cost method.
Sept. 15
10,000 shares of treasury stock reissued at $10 per share.
Dec. 31
The preferred dividend is declared, and a common dividend
of 50¢ per share is declared.
Dec. 31
Net income is $2,292,000.
Prepare the stockholders’ equity section for Hatch Company at
December 31, 2015. (Enter account name only and do not
provide descriptive information.)
HATCH COMPANY
Stockholders’ Equity
December 31, 2015

9. EAT_1363776507149_0_503989536147669_004
Preferred Stock
$
Common Stock
EAT_1363776507149_0_503989536147669_049
EAT_1363776507149_0_503989536147669_066
Paid-in Capital in Excess of Par - Preferred Stock

10. $
Paid-in Capital in Excess of Par - Common Stock
Treasury Stock
EAT_1363776507149_0_503989536147669_128
Retained Earnings

11. EAT_1363776507149_0_503989536147669_162
EAT_1363776507149_0_503989536147669_170: Treasury
Stock
EAT_1363776507149_0_503989536147669_201
$
Warning
Ok
Cancel
Exercise 15-4

12. Faith Evans Corporation is a regional company which is an SEC
registrant. The corporation’s securities are thinly traded on
NASDAQ. Faith Evans Corp. has issued 10,370 units. Each unit
consists of a $519 par, 12% subordinated debenture
and 10 shares of $5 par common stock. The investment banker
has retained 415 units as the underwriting fee. The
other 9,955 units were sold to outside investors for cash at
$913 per unit. Prior to this sale, the 2-week ask price of
common stock was $41 per share. Twelve percent is a
reasonable market yield for the debentures, and therefore the
par value of the bonds is equal to the fair value.
(a)
Prepare the journal entry to record Evans’ transaction, under the
following conditions. (Round answers to 0 decimal places, e.g.
$38,487. Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for
the amounts.)
(1)
Employing the incremental method.
(2)
Employing the proportional method, assuming the recent price
quote on the common stock reflects fair value.
No.
Account Titles and Explanation
Debit
Credit
1.
Unamortized Bond Issue Costs

13. Cash
Bonds Payable
Common Stock
Paid-in Capital in Excess of Par - Preferred Stock
2.
Cash
Unamortized Bond Issue Costs
Discount on Bonds Payable
Bonds Payable
Common Stock

14. Paid-in Capital in Excess of Par - Common Stock
Warning