Chapter 11, Problem 11.3BP

(a)

To determine

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

Par value: It refers to the value of a stock that is stated by the corporation’s charter. It is also known as face value of a stock.

Stated value: It refers to an amount per share, which is assigned by the board of directors to no par value stock.

Issue of common stock for non-cash assets or services: Corporations often issue common stock for the services received from attorneys or consultants as compensation, or for the purchase of non-cash assets such as land, buildings, or equipment.

To Journalize: The transactions and close the net income.

(b)

To determine

To Post: The above journal entries into the stockholders’ equity accounts for Corporation L.

(c)

To determine

To Prepare: The stockholders’ equity section of balance sheet for Corporation L at December 31, 2015, including the disclosure of preferred dividends in arrears.