P14-1A
P14-1A | |
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|[|On January 1, 2010, Carolinas Corporation had the following stockholders' equity accounts. |[|
|p| |p|
|i| |i|
|c|Common Stock ($20 par value, 60,000 shares issued and outstanding) |c|
|]|$1,200,000 |]|
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| |Paid-in Capital in Excess of Par Value | |
| |200,000 | |
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| |Retained Earnings | |
| |600,000 | |
| | | |
| |During the year, the following transactions occurred. | |
| |Feb. 1 | |
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| |Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1. | |
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| |Mar. 1 | |
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| |Paid the dividend declared in February. | |
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| |Apr. 1 | |
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| |Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36. | |
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| |July 1 | |
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| |Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $13 per share. | |
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| |July 31 | |
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| |Issued the shares for the stock dividend. | |
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| |Dec. 1 | |
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| |Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2011. | |
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| |Dec. 31 | |
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| |Determined that net income for the year was $350,000. | |
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|[|Journalize the transactions and the closing entry for net income. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. If there is no transaction, |[|
|p|enter No entry as the account and 0 for the amount.) |p|
|i|Date |i|
|c|Account/Description |c|
|]|Debit |]|
| |Credit | |
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| |Feb.1 | |
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| |Mar.1 | |
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| |Apr.1 | |
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| |July 1 | |
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| |July 31 | |
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| |Dec. 1 | |
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| |Dec. 31 | |
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|[|Enter the beginning balances, and post the entries to the stockholders' equity accounts. (If answer is zero, please enter 0. Do not leave any fields blank.) |[|
|p|Common stock |p|
|i| |i|
|c| |c|
|]|Date |]|
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| |Explanation | |
| |Ref. | |
| |Debit | |
| |Credit | |
| |Balance | |
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| |Jan. | |
| |1 | |
| |Balance | |
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| |Apr. | |
| |1 | |
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| |July | |
| |31 | |
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| |Common Stock Dividends Distributable | |
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| |Date | |
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| |Explanation | |
| |Ref. | |
| |Debit | |
| |Credit | |
| |Balance | |
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| |July | |
| |1 | |
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| |31 | |
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| |Paid-in capital in excess of Par Value | |
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| |Date | |
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| |Explanation | |
| |Ref. | |
| |Debit | |
| |Credit | |
| |Balance | |
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| |Jan. | |
| |1 | |
| |Balance | |
| |Π | |
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| |July | |
| |1 | |
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| |Retained Earnings | |
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| |Date | |
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| |Explanation | |
| |Ref. | |
| |Debit | |
| |Credit | |
| |Balance | |
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| |Jan. | |
| |1 | |
| |Balance | |
| |Π | |
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| |Feb. | |
| |1 | |
| |Cash dividend | |
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| |July | |
| |1 | |
| |Stock dividend | |
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| |Dec. | |
| |1 | |
| |Cash dividend | |
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| |Dec. | |
| |31 | |
| |Net income | |
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|[|Complete the stockholders' equity section at December 31. |
|p|CAROLINAS CORPORATION |
|i| |
|c|Balance Sheet (Partial) |
|]| |
| |December 31, 2010 |
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| |Stockholders' equity |
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| | [pic], $[pic] par value, |
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| | [pic]shares issued and outstanding |
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| | Total stockholders' equity |
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|E15-8 |
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|[|The following section is taken from Budke Corp.'s balance sheet at December 31, 2009. |[|
|p| |p|
|i| |i|
|c|Current liabilities |c|
|]| |]|
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| | Bond interest payable | |
| | $ 72,000 | |
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| |Long-term liabilities | |
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| | Bonds payable, 9%, due January 1, 2014 | |
| |1,600,000 | |
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| |Interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date. | |
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|[|Journalize the payment of the bond interest on January 1, 2010. |[|
|p|Date |p|
|i|Account/Description |i|
|c|Debit |c|
|]|Credit |]|
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| |Jan. 1 | |
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|[|Assume that on January 1, 2010, after paying interest, Budke calls bonds having a face value of $600,000. The call price is 104. Record the redemption of the bonds. (For multiple |[|
|p|debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) |p|
|i|Date |i|
|c|Account/Description |c|
|]|Debit |]|
| |Credit | |
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| |Jan. 1 | |
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|P15-1A |
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|On May 1, 2010, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2010, and pay interest semiannually on May 1 and November 1. Financial statements are |
|prepared annually on December 31. |
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|Prepare the journal entry to record the issuance of the bonds. |
|Date |
|Account/Description |
|Debit |
|Credit |
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|May 1 |
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|Prepare the adjusting entry to record the accrual of interest on December 31, 2010. |
|Date |
|Account/Description |
|Debit |
|Credit |
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|Dec. 31 |
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|Show the balance sheet presentation on December 31, 2010. |
|Current liabilities |
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|Long-term liabilities |
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|Prepare the journal entry to record payment of interest on May 1, 2011, assuming no accrual of interest from January 1, 2011, to May 1, 2011. (For multiple debit/credit entries, list amounts |
|from largest to smallest eg 10, 5, 3, 2.) |
|Date |
|Account/Description |
|Debit |
|Credit |
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|May 1 |
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|Prepare the journal entry to record payment of interest on November 1, 2011. |
|Date |
|Account/Description |
|Debit |
|Credit |
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|Nov. 1 |
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|Assume that on November 1, 2011, Newby calls the bonds at 102. Record the redemption of the bonds. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) |
|Date |
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|Debit |
|Credit |
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|Nov. 1 |
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|[|Prepare the entry to record the payment of interest on July 1, 2010, assuming no previous accrual of interest on the remaining bonds. |
|p|Date |
|i|Account/Description |
|c|Debit |
|]|Credit |
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|E16-8 |
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Presented below are two independent situations.
1. Heath Cosmetics acquired 15% of the 200,000 shares of common stock of Van Fashion at a total cost of $13 per share on March 18, 2010. On June 30,Van declared and paid a $60,000 dividend. On December 31, Van reported net income of $122,000 for the year. At December 31, the market price of Van Fashion was $15 per share. The stock is classified as available-for-sale.
2. Yoder, Inc. obtained significant influence over Parks Corporation by buying 30% of Parks 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2010. On June 15, Parks declared and paid a cash dividend of $30,000. On December 31, Parks reported a net income of $80,000 for the year.
Instructions
Prepare all the necessary journal entries for 2010 for (a) Heath Cosmetics and (b) Yoder, Inc. (If there is no transaction, enter No entry as the account and 0 for the amount.)
|Date |Account/Description |Debit |Credit |
|(a) Mar. 18 |[pic] |[pic] | |
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| June 30 |[pic] |[pic] | |
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| Dec. 31 |[pic] |[pic] | |
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|(b) Jan. 1 |[pic] |[pic] | |
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| June 15 |[pic] |[pic] | |
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| Dec. 31 |[pic] |[pic] | |
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Click here if you would like to Show Work for this question
|E18-7 |
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Bennis Company has the following comparative balance sheet data.
| |BENNIS COMPANY |
| |Balance Sheets |
| |December 31 |
| | |2011 | |2010 |
| |Cash |$ 15,000 | |$ 30,000 |
| |Receivables (net) |70,000 | |60,000 |
| |Inventories |60,000 | |50,000 |
| |Plant assets (net) |200,000 | |180,000 |
| | |$345,000 | |$320,000 |
| | | | | |
| |Accounts payable |$50,000 | |$60,000 |
| |Mortgage payable (15%) |100,000 | |100,000 |
| |Common stock, $10 par |140,000 | |120,000 |
| |Retained earnings |55,000 | |40,000 |
| | |$345,000 | |$320,000 |
Additional information for 2011:
1. Net income was $25,000.
2. Sales on account were $410,000. Sales returns and allowances were $20,000.
3. Cost of goods sold was $198,000.
4. The allowance for doubtful accounts was $2,500 on December 31, 2011, and $2,000 on December 31, 2010.
Instructions
Compute the following ratios at December 31, 2011. (a) Current. (b) Acid-test. (c) Receivables turnover. (d) Inventory turnover. (Round answers to 1 decimal place, e.g. 10.5.)
|(a) |Current ratio |[pic]: 1 |
|(b) |Acid-test ratio |[pic]: 1 |
|(c) |Receivables turnover |[pic]times |
|(d) |Inventory turnover |[pic]times |
P14-1A)
(a) Feb. 1 Retained Earnings (60,000 X $1) 60,000
Dividends Payable 60,000
Mar. 1 Dividends Payable 60,000
Cash 60,000
Apr. 1 Memo—two-for-one stock split
increases number of shares to
120,000 = (60,000 X 2) and reduces
par value to $10 per share.
July 1 Retained Earnings (12,000 X $13) 156,000
Common Stock Dividends
Distributable (12,000 X $10) 120,000
Paid-in Capital in Excess of
Par Value (12,000 X $3) 36,000
31 Common Stock Dividends
Distributable 120,000
Common Stock 120,000
Dec. 1 Retained Earnings (132,000 X $.50) 66,000
Dividends Payable 66,000
31 Income Summary 350,000
Retained Earnings 350,000
(b)
Common Stock
|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |
|Jan. 1 | |Balance | |Π | | | | | |1,200,000 |
|Apr. 1 | |2 for 1 split—new | | | | | | | | |
| | | par $10 | | | | | | | | |
|July 31 | | | | | | | |120,000 | |1,320,000 |
Common Stock Dividends Distributable
|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |
|July 1 | | | | | | | |120,000 | |120,000 |
|31 | | | | | |120,000 | | | | 0 |
Paid-in Capital in Excess of Par Value
|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |
|Jan. 1 | |Balance | |Π | | | | | |200,000 |
|July 1 | | | | | | | |36,000 | |236,000 |
Retained Earnings
|Date | |Explanation | |Ref. | |Debit | |Credit | |Balance |
|Jan. 1 | |Balance | |Π | | | | | |600,000 |
|Feb. 1 | |Cash dividend | | | | 60,000 | | | |540,000 |
|July 1 | |Stock dividend | | | |156,000 | | | |384,000 |
|Dec. 1 | |Cash dividend | | | |66,000 | | | |318,000 |
|31 | |Net income | | | | | |350,000 | |668,000 |
(c) CAROLINAS CORPORATION
Balance Sheet (Partial)
December 31, 2010
Stockholders’ equity
Paid-in capital
Capital stock
Common stock, $10 par value, 132,000
shares issued and outstanding $1,320,000
Additional paid-in capital
In excess of par value 236,000
Total paid-in capital 1,556,000
Retained earnings 668,000
Total stockholders’ equity $2,224,000
E15-8)
(a) Jan. 1 Bond Interest Payable 72,000
Cash 72,000
(b) Jan 1 Bonds Payable 600,000
Loss on Bond Redemption 24,000
Cash ($600,000 X 1.04) 624,000
(c) July 1 Bond Interest Expense 45,000
Cash ($1,000,000 X 9% X 1/2) 45,000
P15-1A)
(a) 2010
May 1 Cash 600,000
Bonds Payable 600,000
(b) Dec. 31 Bond Interest Expense 9,000
Bond Interest Payable
($600,000 X 9% X 2/12) 9,000
(c) Current Liabilities
Bonds Interest Payable $ 9,000
Long-term Liabilities
Bonds Payable, due 2015 $600,000
(d) 2011
May 1 Bond Interest Payable 9,000
Bond Interest Expense
($600,000 X 9% X 4/12) 18,000
Cash 27,000
(e) Nov. 1 Bond Interest Expense 27,000
Cash ($600,000 X 9% X 1/2) 27,000
(f) Nov. 1 Bonds Payable 600,000
Loss on Bond Redemption 12,000
Cash ($600,000 X 1.02) 612,000
E16-8)
1. 2010
Mar. 18 Stock Investments 390,000
Cash (200,000 X 15% X $13) 390,000
June 30 Cash 9,000
Dividend Revenue
($60,000 X 15%) 9,000
Dec. 31 Market Adjustment—Available-for-
Sale 60,000
Unrealized Gain or Loss—Equity
($450,000 – $390,000) 60,000
2. Jan. 1 Stock Investments 81,000
Cash (30,000 X 30% X $9) 81,000
June 15 Cash 9,000
Stock Investments
($30,000 X 30%) 9,000
Dec. 31 Stock Investments 24,000
Revenue from Investment in
Parks Corp.
($80,000 X 30%) 24,000
E18-7)
(a) [pic] = 2.9:1.
(b) [pic] = 1.7:1.
(c) [pic] = 6.0 times.
(d) [pic] = 3.6 times.
| |(1) |[pic] | | | |
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| |(2) |[pic] | | | |
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