February 13Cash (60 million shares x $10 per share)............................ 600

Common stock (60 million shares x $1 par).................. 60Paid-in capital – excess of par (difference)................... 540

February 14Legal expenses (1 million shares x $10 per share).............. 10

Common stock (1 million shares x $1 par)................... 1Paid-in capital – excess of par (difference)................... 9

Note: Because 60 million shares sold the previous day for $10 per share, it’s reasonable to assume a $10 per share fair value.

February 14Cash............................................................................ 90

Common stock (3 million shares x $1 par) .................. 3Paid-in capital – excess of par, common*............... 27Preferred stock (1 million shares x $50 par).................. 50Paid-in capital – excess of par, preferred**............. 10

* 3 million shares x [$10 market value - $1 par].** Since the value of the common shares is known ($30 million), the market value of the

preferred ($60 million) is assumed from the total selling price ($90 million).

November 16Property, plant, and equipment (cash value).................. 1,844,000

Common stock (190,000 shares at $1 par per share)....... 190,000Paid-in capital – excess of par (difference)................ 1,654,000

1. January 8, 2013($ in millions)

© The McGraw-Hill Companies, Inc., 2013Alternate Exercise and Problem Solutions 18-1

Chapter 18 Shareholders’ Equity

EXERCISES Exercise 18-1

Exercise 18-2

Common stock (8 million shares x $1 par)................................. 8Paid-in capital – excess of par (8 million shares x $3*)................ 24Retained earnings (difference)................................................. 16

Cash (8 million shares x $6 per share)..................................... 48* Paid-in capital – excess of par: $1,200 ÷ 400 million shares

2. August 24, 2013Common stock (16 million shares x $1 par)................................ 16Paid-in capital – excess of par (16 million shares x $3)................ 48

Paid-in capital – reacquired shares (difference)................... 8Cash (16 million shares x $3.50 per share)................................ 56

3. July 26, 2014Cash (12 million shares x $7 per share)........................................ 84

Common stock (12 million shares x $1 par)............................ 12Paid-in capital – excess of par (difference).............................. 72

Requirement 1

a. February 20 – declaration date

Investment in Brown International stock ......................... 15,000Gain on appreciation of investment ($500,000 - $485,000) 15,000

Retained earnings (100,000 shares at $5 per share).................... 500,000Property dividends payable ......................................... 500,000

February 28 – date of record no entry

March 20 – payment dateProperty dividends payable ............................................. 500,000

Investment in Brown International stock ..................... 500,000

b. April 4Paid-in capital – excess of par, common*........................ 180,000

Common stock (25% x [728,000 - 8,000] shares at $1 par) . . 180,000

*alternatively, retained earnings may be debited.

© The McGraw-Hill Companies, Inc., 201318-2 Intermediate Accounting, 7e

Exercise 18-3

c. July 25 Retained earnings (27,000* x $12 per share)............................. 324,000

Common stock (27,000* x $1 par) .................................. 27,000Paid-in capital – excess of par, common (difference)..... 297,000

* 3% x [728,000 - 8,000 + 180,000 shares] = 27,000 additional shares

d. December 2 – declaration dateRetained earnings............................................................ 7,600

Cash dividends payable ($100,000 par x 7.6%) ............... 7,600

December 19 – date of record no entry

December 27 – payment dateCash dividends payable .................................................. 7,600

Cash ............................................................................ 7,600

e. December 2 – declaration dateRetained earnings............................................................ 463,500

Cash dividends payable (927,000* x $.50) ..................... 463,500

* 728,000 - 8,000 + 180,000 + 27,000 = 927,000 shares

December 19 – date of record no entry

December 27 – payment dateCash dividends payable .................................................. 463,500

Cash ............................................................................ 463,500

Requirement 2 Paid-in capital:Preferred stock, 7.6%, 100,000 shares at $1 par........... $ 100,000Common stock, 927,0001 shares at $1 par .................. 927,000 Paid-in capital – excess of par, preferred...................... 2,900,000 Paid-in capital – excess of par, common...................... 5,265,000 2

Retained earnings........................................... 9,404,900 3

Treasury stock, at cost; 8,000 common shares ............ (88,000 ) Total shareholders’ equity........................................... $18,508,900

© The McGraw-Hill Companies, Inc., 2013Alternate Exercise and Problem Solutions 18-3

Exercise 18-3 (concluded)

1 728,000 – 8,000 + 180,000 + 27,000 = 927,000 shares2 $5,148,000 - 180,000 + 297,000 = $5,265,0003 $9,800,000 – 500,000 – 324,000 – 7,600 – 463,500 + 900,000 = $9,404,900

Requirement 1 a. March 6, 2013

($ in millions)

* Paid-in capital – excess of par: $560 ÷ 80

b. September 3, 2013

c. October 12, 2015

Requirement 2

Retired TreasuryStock Stock

© The McGraw-Hill Companies, Inc., 201318-4 Intermediate Accounting, 7e

PROBLEMS Problem 18-1

Retirement Treasury Stock

Common stock (3 million sh. x $1) 3 Treasury stock (3 million sh. x $10) 30Paid-in capital – excess of par Cash30

(3 million shares x $7*) 21Paid-in capital – reacquired shares 1Retained earnings (plug) 5

Cash 30

Cash (1 million sh. x $11) 11 Cash (1 million sh. x $11) 11Common stock (1 million sh. x $1) 1 Treasury stock (1 million sh. x $10) 10Paid-in capital – excess of par 10 Paid-in capital– reacquired sh. 1

Cash 4 Cash 4Common stock (1 million sh. x $1) 1 Paid-in cap.- reacquired sh.(1 + 1 ) 2Paid-in capital – excess of par 3 Retained earnings (plug) 4

Treasury stock (1 million sh. x $10)10

Problem 18-1 (concluded)

Shareholders’ Equity $ in millions

Paid-in capital:Common stock, at $1 par, ............................................ $ 79 $ 80Paid-in capital – excess of par ...................................... 561 * 560Paid-in capital – reacquired shares................................ 0 0

Retained earnings........................................................ 339 ** 349 ***

Less: treasury stock, 1 million shares (at cost).......... (10 ) Total shareholders’ equity............................................ $979 $979

* 560 – 21 + 10 + 12** 350 – 11 *** 350 - 1

or, alternatively:Paid-in capital:Common stock, at $1 par, ............................................ $ 79 $ 80Additional paid-in capital.............................................. 561 * 560

Retained earnings........................................................ 339 ** 349 ***

Less: treasury stock, 1 million shares (at cost).......... (10 ) Total shareholders’ equity............................................ $979 $979

* 560 - 21 + 10 + 12** 350 – 11 *** 350 – 1

Requirement 1 a. November 2 – declaration date

Retained earnings....................................................... 252,000,000Cash dividends payable (315 million shares at $.80/share) 252,000,000

November 16 – date of record no entry

December 2 – payment dateCash dividends payable ............................................. 252,000,000

Cash ....................................................................... 252,000,000

© The McGraw-Hill Companies, Inc., 2013Alternate Exercise and Problem Solutions 18-5

Problem 18-2

b. March 3 – declaration dateInvestment in bonds.................................................... 900,000

Gain on appreciation of investment ($4.8 million – 3.9 million......................................... 900,000

Retained earnings ...................................................... 4,800,000Property dividends payable ................................... 4,800,000

March 14– date of record no entry

April 6– payment dateProperty dividends payable ........................................ 4,800,000

Investment in bonds ............................................... 4,800,000

c. July 13Retained earnings (15,750,000* x $21 per share)............ 330,750,000

Common stock ([15,750,000* – 750,000] x $1 par) . . 15,000,000Paid-in capital – excess of par ([15,750,000* – 750,000] x $20 per share)............... 300,000,000Cash (750,000 shares at $21 market price per share)..... 15,750,000

* 5% x 315,000,000 shares = 15,750,000 additional shares

d. November 2 – declaration dateRetained earnings....................................................... 264,000,000

Cash dividends payable (330,000,000* x $.80)............. 264,000,000* 315,000,000 + 15,000,000 = 330,000,000 shares

November 16 – date of record no entry

December 2 – payment dateCash dividends payable ............................................. 264,000,000

Cash ....................................................................... 264,000,000

e. January 16Paid-in capital – excess of par..................................... 165,000,000

Common stock (165,000,000* shares at $1 par) ........... 165,000,000

* 330,000,000 shares x 50% = 165,000,000 shares

© The McGraw-Hill Companies, Inc., 201318-6 Intermediate Accounting, 7e

Problem 18-2 (continued)

f. November 2 – declaration dateRetained earnings....................................................... 321,750,000

Cash dividends payable (495,000,000 * x $.65)............ 321,750,000

* 315,000,000 + 15,000,000 + 165,000,000 = 495,000,000 shares

November 16 – date of record no entry

December 2 – payment dateCash dividends payable ............................................. 321,750,000

Cash ....................................................................... 321,750,000

© The McGraw-Hill Companies, Inc., 2013Alternate Exercise and Problem Solutions 18-7

Requirement 2 BLT Corporation

Statement of Shareholders’ Equity For the Years Ended Dec. 31, 2013, 2014, and 2015 ($ in 000s)

CommonStock

AdditionalPaid-in Capital

RetainedEarnings

TotalShareholders’

Equity

Jan. 1, 2013 315,000 1,890,000 2,910,000 5,115,000

Net income 990,000 990,000 Cash dividends (252,000) (252,000)Dec. 31, 2013 315,000 1,890,000 3,648,000 5,853,000

Property   dividends

(4,800) (4,800)

Common stock dividend

15,000 300,000 (330,750) (15,750)

Net income 1,185,000 1,185,000 Cash dividends (264,000) (264,000)Dec. 31, 2014 330,000 2,190,000 4,233,450 6,753,450

3 for 2 split effected in theform of a stock dividend

165,000 (165,000)

Net income 1,365,000 1,365,000 Cash dividends (321,750) (321,750)Dec. 31, 2015 495,000 2,025,000 5,276,700 7,796,700

© The McGraw-Hill Companies, Inc., 201318-8 Intermediate Accounting, 7e

Problem 18-2 (concluded)