Hurdle Corporation is authorized to issue 200,000 shares of common stock. In its only issuance to date, Hurdle sold 50,000 shares. A few months later, Hurdle reacquired 5,000 of those issued shares with the intention of reissuing them all later. By the end of this year, Hurdle had reissued just 2,000 of the reacquired shares. The board of directors declared a 40-cent dividend at the end of the year. How many shares will receive a dividend? 200,000 50,000 45,000 47,000 Ernie Banks owned 50 shares of Cub Corporation $2 par value common stock prior to the company enacting a 2 for 1 stock split. How many shares does Ernie own after the split? 100 50 25 200 PROBLEM 15 (15 pts.) Lambert Corporation has 8,000 shares of 10%, $5 par value preferred stock and 100,000 shares of common stock outstanding. The preferred stock is cumulative. Prepare a table showing the amount of Dividends allocated to each group of stockholders each year using the following information. YEAR TOTAL DIVIDENDS 2017 $3,000 2018 $4,500 2019 $6,000 PROBLEM 16 (24 pts.) On January 1 of this year, Claypool, Inc.had 50,000 shares of its $1 par value common stock issued and outstanding. Prepare general journal entries for the following transactions involving its stock. March 8 Claypool reacquired 7,000 of its own shares with plans to reissue them at a later date. Claypool paid $8 per share. April 7 Reissued 2000 shares for a total of $15,000. ($7.50 per share) May 11 Reissued 1000 shares for a total of $8,500. ($8.50 per share) June 14 Reissued 2000 shares for a total of $15,800. ($7.90 per share)

1. Dividend will be paid to outside shareholders only and not for treasury shares. Thus, shares that qualify for dividend are: 50,000 - 5,000 (Reacquired) + 2,000 (Reissued) = 47,000. Hence Option D is Correct. 2. Since the split is 2 for 1 share, Ernie Bank will own 50*2 = 100 shares after stock split.Thus Option A is correct. 3. Preference Dividend is cumulative ie, 5*8000*10% = $ 4,000 10% Preference Share Common Stock 2017 3000 0 2018 1000 (2017)+ 3,500 (2018) = 4500 0 2019 500 (2018) + 4000 = 4,500 6000-4500 = 1,500 4. Journal Entries($) March 8 Treasury Stock Dr 56,000 To Cash 56,000 (Shares repurchased) Cash Dr (7.5*2000) 15,000 Additional Paid in capital excess of par Dr (8-7.5)*2000 1,000 To Treasury Stock 16,000 (Treasury stock Reissued) May 11 Cash Dr(8.5*1000) 8,500 To Treasury Stock 8,000 To Additional Paid in capital excess of par (8.5-8)*1000 500 (Treasury stock Reissued) June 14 Cash Dr (7.9*2000) 15,800 Additional Paid in capital excess of par Dr (8-7.9)*2000 200 To Treasury Stock 16,000 (Treasury stock Reissued) .

Hurdle Corporation is authorized to issue 200,000 sha…

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1. Dividend will be paid to outside shareholders only and not for treasury shares. Thus, shares that qualify for dividend are: 50,000 - 5,000 (Reacquired) + 2,000 (Reissued) = 47,000. Hence Option D is Correct.

2. Since the split is 2 for 1 share, Ernie Bank will own 50*2 = 100 shares after stock split.

Thus Option A is correct.

3. Preference Dividend is cumulative ie, 5*8000*10% = $ 4,000

	10% Preference Share	Common Stock
2017	3000	0
2018	1000 (2017)+ 3,500 (2018) = 4500	0
2019	500 (2018) + 4000 = 4,500	6000-4500 = 1,500

Journal Entries($)
March 8	Treasury Stock Dr	56,000
	To Cash		56,000
	(Shares repurchased)

	Cash Dr (7.5*2000)	15,000
	Additional Paid in capital excess of par Dr (8-7.5)*2000	1,000
	To Treasury Stock		16,000
	(Treasury stock Reissued)

May 11	Cash Dr(8.5*1000)	8,500
	To Treasury Stock		8,000
	To Additional Paid in capital excess of par (8.5-8)*1000		500
	(Treasury stock Reissued)

June 14	Cash Dr (7.9*2000)	15,800
	Additional Paid in capital excess of par Dr (8-7.9)*2000	200
	To Treasury Stock		16,000
	(Treasury stock Reissued)

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