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Accounting

Ex 13-5 (Question 1)

Inside incorporated was issued a charter on January 15, 2009 that authorized the following capital stock: Common stock, $6 par, 100,000 shares, one vote per share. Preferred stock, 7 percent, par value $10 dollars per share, 5000 shares nonvoting. During 2009 the following selected transactions were completed in the order given: (A) sold and issued 20000 shares of the $6 par common stock at $18 cash per share. (B) Sold and issued 3000 shares of preferred stock at $22 cash per share. (C) at the end of 2009, the income summary account included net income of 38000. REQUIRED- (1), prepare journal entries to record transactions a and b, and close income summary to retained earnings in C

A Cash Dr. 360000 Common stock Cr. 120000 Additional paid in capital Common Stock Cr.240000

B Cash Dr.66000 Preferred stock Cr.30000 Additional paid in capital –preferred stock Cr36000

C Income summary Dr.38000 Retained earnings Cr.38000

.(2),Prepare the stockholders equity section of the balance sheet at December 31,2009.

Stockholders Equity Section

Authorized Capital

100000 shares Common Stock at par $ 6 600000

5000 shares Preferred Stock at par $10 50000

Total authorized capital 650000

Issued Capital

20000 shares Common Stock at $6 120000

3000 shares Preferred Stock at $10 30000

Additional paid in capital Common Stock 240000

Additional paid in capital Preferred Stock 36000

Total contributed capital 426000

Retained earnings 38000

Total stockholders equity 464000

(3) Assume on that you are a common stockholder. If inside incorporated needed additional capitol, would you prefer to have it issue additional common stock or additional preferred stock, explain why.

The common stock should be preferred as the premium on common stock is 3 times to par value as compared to 2.2 times premium on preferred stock to par value.

PA-13-2(Question 2)

Prior to changing its corporate name to Macys inc.,on June 1st 2007 they offered this information: Approved split of stock, federated shareholders approved an increase in the number of authorized shares of federated common stock from 500 million to 1 billion. With the stock split federated quarterly dividend will be 12.75 cents per outstanding common share payable july 3 rd 2006, to federated shareholders of record at the close of business on June 16th 2006.

Required: Although the press release refers to a stock split, the transaction actually involved a 100% stock dividend, to be recorded at par value. Prepare any journal entries that federated department stores should have made as a result of the stock and cash dividend. Assume that at the time of the stock dividend, the company had 175 million shares outstanding; the par value was 0.01 per share, and the market value as $73 per share.

Retained earnings Dr.48.125 million Dividend payable Cr.44.625 million Stock Dividend distributable Cr. 3.5 million.

Dividend payable Dr. 44.625 Cash Cr.44.625

Dividend Distributable Dr.3.5 Common stock Cr.3.5

(2) What 2 requirements would the board of directors have considered before making the dividend decision?

1 For cash dividend company should have enough cash.

2 Company should have enough balance in retained earnings account.

3 For stock dividend there should be enough quantity of authorized capital.

Ex 14-5 (Question 3)

On October 1, 2009, Garden Equipment Corporation issued 2000 bonds at face value. The bond certificate indicates a face value of $1000, a stated interest rate of 7% paid annually on September 30th, and September 30, 2020 maturity date. Required: Give the journal entry to record the bond issue on October 1, 2009.

Cash Dr. 2000000 . Bonds Payable Cr, 2000000

(2) Give the adjusting entry required on December 31, 2009.

Interest expenses Dr. 35000 Interest payable Cr.35000

2000000x.07x3/12

(3) Assume Garden Equipment retires the bond early on October 1, 2012, at a price of 103. Give the journal entree to record this early retirement.

Bonds Payable Dr.2000000 Loss on early retirement Dr.60000 Cash Cr.2060000

PA 14-2(question 4)

Sikes corporation, whose annual accounting period ends December 31, issued the following bonds: Date bonds: January 1, 2008. Maturity amount and date: 200000 due in 10 years (December 31, 2017). Interest: 10percent per year payable each December 31. Date issued Jan1, 2008. Required: , Provide the following amounts to be reported on the January 1,2008, financial statements immediately after the bond is issued.

Case a(issued at 100)

Bonds payable 200000

Case b (issued at 96)

Bonds payable 200000

Less Un amortized Discount on bonds -8000

Unpaid bond liabilities 192000

Case c (issued at 102)

Bonds payable 200000

Add Less Un amortized Premium on bonds 2000

Unpaid bond liabilities 202000

A.Bonds payable, b unamortized premium or discount, c unpaid bond liability.

Assume that a retired person has written to you (an investment adviser) asking why should they buy a bond at premium when they can find one at a discount. Write a brief response to this

question.

The main reason for the bond which is selling at premium is offering the interest rate more than the prevailing market interest rate. The other reason for premium may be bond of financial sound organization may be selling at premium for its good reputation.

Ex 15-3 (Question 5)

On June 30,2009, Metromedia inc., purchased 10,000 shares of Mitek stock for $20 per share. Management purchased the stock for speculative purposes and recorded the stock in the trading securities profile. The following information pertains to the price per share of Mitek stock: Price 12/31/2009- $24, 12/31/2010 -$31, 12/31/2011-$25. Metro Media sold all of the Mitek stock on February 14, 2012, at a price of $22 per share. Prepare any Journal entries that are required by the facts presented I this case.

06/30/2009 Trading Securities Dr.200000 Cash Cr200000

12/31/2009 Trading Securities Dr. 40000 Unrealized gain on trading securities Cr.40000

12/31/2010 Trading Securities Dr. 70000 Unrealized gain on trading securities Cr.70000

12/31/2011 Unrealized loss on trading securities Dr.60000 Trading Securities Cr. 60000

2/14/2012 Cash Dr 220000 Loss on sale of trading securities Dr.30000

Trading Securities Cr.250000

PA 15-4(Question 6)

On August 4th 2009 , Coffman Corporation purchased 1000 shares of Dittman company for 45,000. The following information applies to the stock price of Dittman company: 12/31/2009- $52, 12/31/2010-$47, 12/31/2011 $38. Dittman Company declares and pays cash dividends of $2 per share on June 1 of each year.Required: (1) prepare n the journal entries to record the facts in the case assuming Coffman purchased the shares for the trading portfolio

Aug 4 2009 Trading Securities. Dr45000 Cash 45000

Dec 31 2009 Trading Securities. Dr 7000 Unrealized gain on trading securities. Cr 7000

June 1 2010 Cash Dr.2000 Dividend Income Cr.2000

Dec 31 2010 Unrealized loss on trading securities. Dr 5000 Trading Securities. Cr 5000

June 1 2011 Cash Dr.2000 Dividend Income Cr.2000

Dec 31 2011 Unrealized loss on trading securities. Dr 9000 Trading Securities. Cr 9000

.(2) Prepare the journal entries to record the facts in the case assuming Coffman purchased the stocks for the available for-sale portfolio.

Aug 4 2009 Available for sale Securities. Dr45000 Cash 45000

Dec 31 2009 Available for sale securities. Dr 7000 Unrealized gain/Loss. Cr 7000

June 1 2010 Cash Dr.2000 Dividend Income Cr.2000

Dec 31 2010 Unrealized Gain/loss . Dr 5000 Available for sale Securities. Cr 5000

June 1 2011 Cash Dr.2000 Dividend Income Cr.2000

Dec 31 2011 Unrealized Gain/loss on trading securities. Dr 9000 Available for sale Securities. Cr 9000

(3) Prepare journal entries to record the facts in the case assuming Coffman used the equity method to account for the investment. Coffman owns 30 percent of Dittman and Dittman reported $50,000 in each income each year.

Aug 4 2009 Investment in Coffman Corp. Dr45000 Cash 45000

Dec 31 2009 Investment in Coffman Corp. Dr 15000 Revenue for Coffman Corp. Cr 15000

June 1 2010 Cash Dr.2000 Investment in Coffman Corp Cr.2000

Dec 31 2010 Investment in Coffman Corp. Dr 15000 Revenue for Coffman Corp. Cr 15000

June 1 2011 Cash Dr.2000 Investment in Coffman Corp Cr.2000

Dec 31 2011 Investment in Coffman Corp. Dr 15000 Revenue for Coffman Corp. Cr 15000

Ex 16-10(Question 7)

A recent annual report for PepsiCo contained the following information for the period (in millions): Net income $4078, cash dividends paid 1642, depreciation 1308, increase in accounts receivable 272, increase in inventory 132, increase in prepaid expense 56, increase in accounts payable 188, increase in taxes payable 609, decrease in other liabilities

 

The question is incomplete, please complete it. So the answer may be given

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