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Page 615/616 - PR 13-1A Dividends on preferred and common stock Partridge Theatre Inc. owns and operates movie theaters throughout Texas and Oklahoma. Partridge Theatre Inc. has declared the following annual dividends over a six year period: 2009, $18,000; 2010, $40,000; 2011, $80,000; 2012, $120,000; 2013, $150,000; and 2014, $228,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 40,000 shares of cumulative, preferred 1% stock, $75 par, and 200,000 shares of common stock, $5 par.Instructions:1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2009. Summarize the data in tabular form, using the following column headings:Preferred Dividends Common DividendsYear Total DividendsTotalPer Share Total Per Share2009 $ 18,0002010 40,0002011 80,0002012 120,0002013 150,0002014 228,0002. Calculate the average annual dividend per share for each class of stock for the six-year period.3. Assuming a market price per share of $125 for the preferred stock and $7.60 for the common stock, calculate the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.Page 617 - PR 13-4A Entries for selected corporate transactionsMorrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2014, are as follows:Common Stock, $20 stated value (500,000 shares authorized, 375,000 shares issued) .................................$ 7,500,000Paid-In Capital in Excess of Stated Value—Common Stock ............ 825,000Retained Earnings .................................................. 33,600,000Treasury Stock (25,000 shares, at cost) ............................... 450,000The following selected transactions occurred during the year:Jan. 22. Paid cash dividends of $0.08 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $28,000.Apr. 10. Issued 75,000 shares of common stock for $24 per share.June 6. Sold all of the treasury stock for $26 per share.July 5. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share.Aug. 15. Issued the certificates for the dividend declared on July 5.Nov. 23. Purchased 30,000 shares of treasury stock for $19 per share.Dec. 28. Declared a $0.10-per-share dividend on common stock.Dec. 31. Closed the credit balance of the income summary account, $1,125,000.Dec. 31. Closed the two dividends accounts to Retained Earnings.Instructions:1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.2. Journalize the entries to record the transactions, and post to the eight selected accounts.3. Prepare a retained earnings statement for the year ended December 31, 2014.4. Prepare the Stockholders’ Equity section of the December 31, 2014, balance sheet.Page 618 - PR 13-1b Dividends on preferred and common stock Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike Corp. has declared the following annual dividends over a six-year period ended December 31 of each year: 2009, $24,000; 2010, $10,000; 2011, $126,000; 2012, $100,000; 2013, $125,000; and 2014, $125,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $90 par, and 100,000 shares of common stock, $4 par.Instructions:1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2009. Summarize the data in tabular form, using the following column headings:Preferred Dividends Common DividendsYear Total DividendsTotalPer Share Total Per Share2009 $ 24,0002010 10,0002011 126,0002012 100,0002013 125,0002014 125,0002. Determine the average annual dividend per share for each class of stock for the six year period.3. Assuming a market price of $100 for the preferred stock and $5 for the common stock, calculate the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.Page 703/704 - PR 15-2A Stock investment transactions, trading securities Scofield Financial Co. is a regional insurance company that began operations on January 1, 2014. The following transactions relate to trading securities acquired by Scofield Financial Co., which has a fiscal year ending on December 31:2014Mar. 14. Purchased 5,000 shares of Wilkomm Inc. as a trading security at $40 per share plus a brokerage commission of $500.Apr. 24. Purchased 1,800 shares of McMarsh Inc. as a trading security at $50 plus a brokerage commission of $198.June 1. Sold 2,600 shares of Wilkomm Inc. for $38 per share less a $100 brokerage commission.30. Received an annual dividend of $0.35 per share on Wilkomm Inc. stock.Dec. 31. The portfolio of trading securities was adjusted to fair values of $38 and $49 per share for Wilkomm Inc. and McMarsh Inc., respectively.2015 Apr. 4. Purchased 3,500 shares of Daley Inc. as a trading security at $30 per share plus a $175 brokerage commission.June 28. Received an annual dividend of $0.40 per share on Wilkomm Inc. stock.Sept. 9. Sold 700 shares of Daley Inc. for $32 per share less a $50 brokerage commission.Dec. 31. The portfolio of trading securities had a cost of $270,578 and a fair value of $350,000, requiring a debit balance in Valuation Allowance for Trading Investments of $79,422 ($350,000 2 $270,578). Thus, the credit balance from December 31, 2014, is to be adjusted to the new balance.Instructions:1. Journalize the entries to record these transactions.2. Prepare the investment-related current asset balance sheet presentation for Scofield Financial Co. on December 31, 2015.3. How are unrealized gains or losses on trading investments presented in the financial statements of Scofield Financial Co.?Pages 704/705 - PR 15-3A Stock investment transactions, equity method and available-for-sale securitiesDaffitar Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 2014. The following transactions relate to securities acquired by Daffitar Inc., which has a fiscal year ending on December 31:2014Feb. 1. Purchased 12,000 shares of Acuity Inc. as an available-for-sale security at $27 per share, including the brokerage commission.Mar. 18. Received a cash dividend of $0.18 per share on Acuity Inc. stock.Sept.12. A cash dividend of $0.24 per share was received on the Acuity stock. 28. Sold 1,000 shares of Acuity Inc. stock at $21 per share, less a brokerage commission of $50.Dec. 31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.2015Jan. 23. Purchased an influential interest in Shouse Inc. for $376,000 by purchasing 70,000 shares directly from the estate of the founder of Shouse Inc. There are 250,000 shares of Shouse Inc. stock outstanding.Mar. 16. Received a cash dividend of $0.24 per share on Acuity Inc. stock.Sept.16. Received a cash dividend of $0.24 per share plus an extra dividend of $0.06 per share on Acuity Inc. stock.Dec. 31. Received $30,100 of cash dividends on Shouse Inc. stock. Shouse Inc. reported net income of $190,000 in 2015. Daffitar Inc. uses the equity method of accounting for its investment in Shouse Inc.31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $30 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $33 to $30 per share.Instructions1. Journalize the entries to record these transactions.2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Daffitar Inc. on December 31, 2015, assuming the Retained Earnings balance on December 31, 2015, is $465,000.Pages 705/706 - PR 15-4A Investment reporting O’Brien Industries Inc. is a book publisher. The comparative unclassified balance sheets for December 31, 2015 and 2014 are provided below. Selected missing balances are shown by letters.O’Brien Industries Inc.Balance SheetDecember 31, 2015 and 2014Dec. 31, 2015 Dec. 31, 2014Cash $233,000 $220,000Accounts receivable (net) 136,530 138,000Available-for-sale investments (at cost)—Note 1 a. 103,770Less valuation allowance for available-for-sale investments b. 2,500Available-for-sale investments (fair value) $ c. $101,270Interest receivable $ d.—Investment in Jolly Roger Co. stock—Note 2 e. $ 77,000Office equipment (net) 115,000 130,000Total assets $ f.$666,270Accounts payable $ 69,400 $ 60,000Common stock 70,000 70,000Excess of issue price over par225,000 225,000Retained earnings g. 308,770Unrealized gain (loss) on available-for-sale investments h. 2,500Total liabilities and stockholders’ equity $ i.$666,270Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2014, are as follows:No. of Shares Cost per Share Total Cost Total Fair ValueBernard Co. stock 2,250 $17 $ 38,250 $ 37,500Chadwick Co. stock 1,260 52 65,520 63,770TOTALS$103,770 $101,270Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding shares of Jolly Roger Co.The following selected investment transactions occurred during 2015:May 5. Purchased 3,080 shares of Gozar Inc. at $30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security.Oct. 1. Purchased $40,000 of Nightline Co. 6%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. 9. Dividends of $12,500 are received on the Jolly Roger Co. investment.Dec. 31. Jolly Roger Co. reported a total net income of $112,000 for 2015. O’Brien Industries Inc. recorded equity earnings for its share of Jolly Roger Co. net income.31. Accrued three months of interest on the Nightline bonds.31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts:Available-for-SaleFair ValueInvestmentsBernard Co. stock $15.40 per shareChadwick Co. stock $46.00 per shareGozar Inc. stock $32.00 per shareNightline Co. bonds $98 per $100 of face amount 31. Closed the O’Brien Industries Inc. net income of $146,230 for 2015. O’Brien Industries Inc. paid no dividends during 2015.Instructions:Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations. ................
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