Accounting Challenge 10.1

Accounting Decision Files

Stockholders' Equity: Shares, Treasury Stock, and Dividends

About this activity

Campus Cycle Repair · you gather the facts by interviewing, not by reading a handout.

Campus Cycle Repair has ownership questions to settle — shares issued, the possibility of buying some back, and whether to pay a dividend. Riley has views on all three, mostly framed around what feels fair to the owners. The accounting treatment does not always match that instinct. Your job is to establish what each transaction actually does to equity, and what the shop can afford.

Watch the tutorial video

Length: 9 minutes, 16 seconds

Open the tutorial video in a new window

Interview Riley and Morgan

Neither character has the whole picture. Morgan can tell you what the records show; Riley can tell you why. Ask real questions, follow up on anything that does not add up, and reconcile the two accounts before you answer anything.

Riley — founder and owner. Knows the business story and what actually happened, but does not keep the books. Optimistic, cautious about debt, and candid when working from memory.
Interview Riley

Morgan — handled the accounting records. Organized, practical, and precise. Morgan knows what was recorded and how.
Interview Morgan

Questions worth asking

You may ask your own questions. These will get you started.

Riley, what dividend are you considering, and why?
Riley, what retained earnings and cash targets must the proposal satisfy?
Riley, how many common shares do you think are outstanding, and is that an exact figure?
Riley, what dates are being proposed for declaration, record, and payment?
Morgan, what do the stock records show about authorized shares, beginning shares, new shares issued, and treasury shares?
Morgan, what were the par value, issue price, treasury stock cost, preferred stock terms, beginning Retained Earnings, and current-year net income?
Morgan, what are the current cash, asset, liability, and stockholders' equity account balances?
Riley and Morgan, what information was not tracked, and what evidence should be used to evaluate the proposed dividend?

Then answer in Canvas

The questions are in Canvas, in the quiz named Accounting Challenge 10.1.

Interview both characters before you start the quiz.
The questions ask about evidence you gather in the interviews, so the tutorial video alone will not be enough.
You have one attempt, and you will get 5 questions.
Questions appear one at a time, and you cannot return to a question after you submit it.
Keep this page open in a second window so you can go back to an interview while you work.
Do not paste quiz questions into the interviews. Gather facts, then reason from them.

If something does not work

Email Dr. Tietz at wtietz@kent.edu with your section number and what happened. Do not wait until the due date has passed.