Rasmussen College Stock Transactions and Statement of Stockholders Equity Paper You are an employee of a full service bookkeeping and auditing firm called

Rasmussen College Stock Transactions and Statement of Stockholders Equity Paper You are an employee of a full service bookkeeping and auditing firm called Accounting Solutions. You have a client named Dan. Dan owns Dan’s Dependable Delivery, a national delivery service. You are responsible for managing equity records. For this assignment, you will:

Prepare journal entries for equity.
Prepare the Statement of Stockholders’ Equity for Dan’s Dependable Delivery.
Calculate and interpret return on equity.

Use this Module 03 Excel template. All three parts are on the first worksheet.

Record the transactions in the journal using formulas in the cells to show your calculations.
Complete the Statement of Stockholders’ Equity with the given information and template provided.
Use Excel formulas in the cells for the calculations. Module 03 Problem: Stock Transactions and The Statement of Stockholders’ Equity
Part 1
Use this journal page for all transactions.
The company began the current year with 30,000 $1 common shares issued and outstanding. Paid in capital in ex
and retained earnings were $175,000. Net income for the current year was $35,000.The company had 5,000 outs
Use Excel formulas in the cells to document your calculations.
Date
Transaction
2-Jan Issued an additional 10,000 shares of $1 par common stock for $11 per share.
6-Jan Declared a cash dividend on 5,000 shares of 5% $4 par preferred stock and a $.20 per
share dividend on 40,000 shares of common stock outstanding.
15-Jan The date of record for January 6 cash dividend declaration
20-Jan Paid the cash dividend declared on January 6
15-Mar Declared a 2-for-1 stock split by calling in the 40,000 shares of $1 par common stock
and issuing new stock in its place.
10-Apr Declared and distributed a 10% stock dividend on the common stock when the market
value was $12 per share
14-Jun Purchased 1,000 shares of common stock for the treasury for $14 per share
22-Dec Sold 500 treasury shares for $15 per share
Dan’s Dependable Delivery
General Journal
Date
Account
January
2
January
6
January
January
15
20
March
April
15
10
June
14
Post
Ref. Debit
December 22
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Totals
Part 2
$
–
Prepare a Statement of Shareholders’s Equity for Dan’s Dependable Delivery
Dan’s Dependable Delivery began the year with 30,000 $1 Common shares issued and outstanding. Paid in Capita
current year is $35,000. The company had 5,000 outstanding shares of $4 par, 5% Preferred Stock. Taking the tran
Equity for the current year end. Use the table below.
D
State
Preferred Stock
Balance, January 1, 20-Issuance of Stock
Net Income
Cash Dividends
Stock Dividends
Purchase of Treasury Stock
Sale of Treasury Stock
Balance, December 31, 20-Part 3
Calculate and interpret the return on equity.
Given the following information calculate Dan’s Dependable Delivery’s return on equity. Show your calc
is a small regional company called Best Delivery Service. Also calculate Best Delivery Services’ return on equity. In
Dan’s Dependable Delivery
Sales
Equity
Best Delivery Services
Sales
Equity
Current year
$
500,000
$
2,249,950
$
$
230,000
1,500,000
Current year
Dan’s Dependable Delivery Return on Equity
Best Delivery Services Return on Equity
Which is a better investment? Explain.
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ckholders’ Equity
anding. Paid in capital in excess of par was $25,000
he company had 5,000 outstanding shares of $4 par, 5% Preferred Stock.
ck and a $.20 per
Journal Entry Rules:
r common stock
k when the market
Page 1
Credit
1. Must impact at LEAST 2 accounts.
2. Must have at LEAST one debit and one
credit.
3. Debits and Credits MUST balance in
each entry and in the whole journal
4. List debit entries first, credit entries
second in your transactions
Other Tips and Notes:
*Post ref column won’t be used here
because we aren’t posting to the ledger
(ie t-accounts). Leave blank.
*Dates are included for you at
appropriate places in the template. No
lines will be blank. Use them all!
*Choose accounts from the drop down
list. If its not in the list, its not supposed
to be used.
*Because of the List style conditional
formatting that gives the account title
options, you cannot indent the credit
account titles. THAT’S OK and you will
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$
–
outstanding. Paid in Capital in Excess of Par was $25,000 and Retained Earnings were $175,000. Net Income for the
ferred Stock. Taking the transactions from part one into consideration, complete the Statement of Shareholders’
Dan’s Dependable Delivery
Statement of Shareholders’ Equity
For the year ended 20-Common Stock
Paid in Capital – CS
Retained Earnings
Treasury Stock
on equity. Show your calculations in the Excel cells by using Excel formulas. One of Dan’s Dependable Delivery competitors
Services’ return on equity. In a few short sentences explain which company is a better investment.
Return on Equity = Sales/Average Equity
$
$
Previous year
Last year
470,000 $
489,000
2,120,750 $
2,056,250
$
$
Last year
215,000
1,500,750
$
$
150,000
1,056,250
Result shows how well the company uses
investments by their shareholders to
generate earnings growth.
Generally, a good ROE is 15-20%, but the
higher the better.
Format as a Number using 3 decimal
places.
Addressing the question “Which is a
better investment? Explain.”, consider
the following questions:
1. Is Dan’s ROE increasing or decreasing
year over year?
2. Is Best’s ROE increasing or decreasing
year over year?
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2. Is Best’s ROE increasing or decreasing
year over year?
3. Which of the two gives a better return
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Paid in Capital – TS
Total
Delivery competitors
mpany uses
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C
D
D
C
Pa
Pa
R
Tr
N
N
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Cash
Dividends Payable – Common Stock
Dividends Payable – Preferred Stock
Common Stock
Paid In Capital – Common Stock
Paid In Capital – Treasury Stock
Retained Earnings
Treasury Stock
No Entry on Date of Record
No Entry. Update Shares Outstanding & Par Value Info.
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