|
On
January 1, 2010, Applied Technologies Corporation (ATC) issued $318,000 in
bonds that mature in 12 years. The bonds have a stated interest rate of 9
percent. When the bonds were issued, the market interest rate was 9 percent.
The bonds pay interest once per year on December 31.
|
rev: 03-02-2011
8.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 1:
|
|
|
Determine
the price at which the bonds were issued and the amount that ATC received at
issuance. (Omit the "$" sign in your
response.)
|
|
|
Amount received at
issuance
|
$
|
rev: 03-02-2011
Explanation:
|
Because
the stated interest rate was equal to the market interest rate, the bond
would have been issued at face value, meaning a quoted price of 100. The
amount received at issuance would be $318,000 × 100% = $318,000.
|
9.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 2:
|
|
Prepare
the journal entry to record the bond issuance. (Omit
the "$" sign in your response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
Cash
|
|
|
|
Bonds
payable
|
|
|
|
|
||
rev: 03-02-2011
10.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 3:
|
|
Prepare
the journal entry to record the interest payment on December 31, 2010,
assuming no interest has been accrued earlier in the year. (Omit the "$" sign in your response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
Interest expense
|
|
|
|
Cash
|
|
|
|
|
||
rev: 03-02-2011
Explanation:
|
Interest Expense = ($318,000 × 9%
× 12/12) = 28,620
|
|
On
January 1, 2010, Innovative Solutions, Inc., issued $248,000 in bonds at face
value. The bonds have a stated interest rate of 7 percent. The bonds mature
in 11 years and pay interest once per year on December 31.
|
rev: 03-02-2011
11.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 1:
|
|
|
Prepare
the journal entry to record the bond issuance. (Omit
the "$" sign in your response.)
|
|
|
General
Journal
|
Debit
|
Credit
|
|
Cash
|
|
|
|
Bonds
payable
|
|
|
|
|
||
rev: 03-02-2011
12.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 2:
|
|
Prepare
the journal entry to record the interest payment on December 31, 2010. Assume
no interest has been accrued earlier in the year. (Omit
the "$" sign in your response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
Interest expense
|
|
|
|
Cash
|
|
|
|
|
||
rev: 03-02-2011
Explanation:
|
Interest Expense = ($248,000 × 7%
× 12/12) = 17,360
|
13.
award:
5 out of
5.00 points
5 out of
5.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 3:
|
|
Assume
the bonds were retired immediately after the first interest payment at a
quoted price of 103. Prepare the journal entry to record the early retirement
of the bonds. (Omit the "$" sign in your
response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
Bonds payable
|
|
|
|
Loss on bond
retirement
|
|
|
|
Cash
|
|
|
|
|
||
rev: 03-02-2011
Explanation:
|
Cash = ($248,000 × 103%) = 255,440
|
|
Ahlers
Clocks is a retailer of wall, mantle, and grandfather clocks and is located
in the Empire Mall in Sioux Falls, South Dakota. Assume that a grandfather
clock was sold for $5,400 cash plus 8 percent sales tax. The clock had
originally cost Ahlers $3,100.
|
rev: 03-03-2011
14.
award:
10 out of
10.00 points
10 out of
10.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 1:
|
|
Show
the accounting equation effects (indicate the direction of the effect by
selecting + for increase, – for decrease and NE for no effect).
|
|
Assets
|
=
|
Liabilities
|
+
|
Stockholders'
Equity
|
|||
|
Cash
|
+5,832
|
|
Sales tax payable
|
+432
|
|
Sales revenue
|
+5,400
|
|
Inventory
|
-3,100
|
|
No effect
|
NE
|
|
Cost of goods sold
|
-3,100
|
|
|
|||||||
rev: 03-03-2011
15.
award:
10 out of
10.00 points
10 out of
10.00 points
You did not receive credit for this question in a
previous attempt|
Requirement 2:
|
|
Prepare
the journal entry related to this transaction. Assume Ahlers uses a perpetual
inventory system. (Omit the "$" sign in
your response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
Cash
|
|
|
|
Sales
tax payable
|
|
|
|
Sales
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
Inventory
|
|
|
|
|
||
rev: 03-03-2011
Explanation:
|
Sales Tax Payable : ($5,400 × 8%)
= 432
|
|
A company sells 1 million shares
of stock with no par value for $16.40 a share. In recording the transaction,
it would:
|
|
|
debit Cash for $16.40 million and
credit Common Stock for $16.40 million.
|
|
|
|
|
|
|
|
|
|
|
|
debit Cash for $34,000 and credit
Common Stock for $34,000.
|
|
A company issues 515,000 shares of
preferred stock for $29 a share. The stock has a fixed annual dividend rate
of 5% and a par value of $14 per share. The current price of the preferred
stock is $31 a share. Preferred stockholders can anticipate receiving a per
share annual dividend of:
|
|
|
5% of the $31 current market price
per share.
|
|
|
5% of the $15 additional paid-in
capital per share.
|
|
|
5% of the $14 par value per share.
|
|
|
5% of the $29 issue price per
share
|
|
A company issues 101,000 shares of
preferred stock for $41 a share. The stock has a fixed dividend rate of 6%
and a par value of $4 per share. The company records the issuance with a
(rounded):
|
|
|
debit of $4.14 million to Cash and
a credit of $4.14 million to Preferred Stock.
|
|
|
|
|
|
|
|
debit of $404,000 to Cash and a
credit of $404,000 to Preferred Stock.
|
|
|
|
|
|
A corporate charter specifies that
the company may sell up to 25 million shares of stock. The company sells 17
million shares to investors and later buys back 5.5 million shares.
|
rev: 03-03-2011
4.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
The number of authorized shares
after these transactions are accounted for is:
|
rev: 03-03-2011
|
|
17 million shares.
|
|
|
12 million shares.
|
|
|
20 million shares.
|
|
|
25 million shares.
|
5.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
The number of issued shares after
these transactions have been accounted for is:
|
rev: 03-03-2011
|
|
20 million shares.
|
|
|
13 million shares.
|
|
|
17 million shares.
|
|
|
12 million shares.
|
6.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
The current number of shares of
treasury stock after these transactions have been accounted for is:
|
rev: 03-03-2011
|
|
20.0 million shares.
|
|
|
12.0 million shares.
|
|
|
5.5 million shares.
|
|
|
8.0 million shares.
|
7.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
The current number of outstanding
shares after these transactions have been accounted for is:
|
rev: 03-03-2011
|
|
25.0 million shares.
|
|
|
11.5 million shares.
|
|
|
13.0 million shares.
|
|
|
8.0 million shares.
|
|
A company issues 1.11 million
shares of preferred stock with a par value of $7.50 and a market price of
$31.50 per share. The issuance should be recorded as (rounded):
|
|
|
|
|
|
|
a debit to Cash of $8.33 million
and a credit to Preferred Stock of $8.33 million.
|
|
|
|
|
|
|
|
a debit to Cash of $34.97 million
and a credit to Preferred Stock of $34.97 million.
|
|
Incentive Corporation was
organized in 2009 to operate a financial consulting business. The charter
authorized the following capital stock: common stock, par value $6 per share,
13,500 shares. During the first year, the following selected transactions
were completed:
|
|
a.
|
Issued 6,300 shares of common
stock for cash at $19 per share.
|
|
b.
|
Issued 2,300 shares of common
stock for cash at $26 per share.
|
|
Requirement 1:
|
|
Show the effects of each
transaction on the accounting equation. (Indicate
the account, amount, and direction of the effect on the accounting equation
(+ for increase, – for decrease and NE for no effect).)
|
|
|
Assets
|
=
|
Liabilities
|
+
|
Stockholders'
Equity
|
|||
|
a.
|
|
|
||||||
|
|
|
|
|
|
|
|
||
|
b.
|
|
|
||||||
|
|
|
|
|
|
|
|
||
|
|
||||||||
|
Requirement 2:
|
|
Give the journal entry required
for each of these transactions. (Omit the
"$" sign in your response.)
|
|
Event
|
General
Journal
|
Debit
|
Credit
|
|
a.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Requirement 3:
|
|
Prepare the stockholders' equity
section as it should be reported on the 2009 year-end balance sheet. At
year-end, the accounts reflected a profit of $200. (Omit the "$" sign in your response.)
|
|
Stockholders'
Equity
|
||
|
Contributed capital:
|
|
|
|
Common
stock
|
$
|
|
|
Additional
paid-in capital
|
|
|
|
|
|
|
|
Total
contributed capital
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
Stockholders' equity
|
$
|
|
|
|
|
|
|
|
||
|
Requirement 4:
|
|
Incentive Corporation has $43,000
in the company's bank account. Should the company declare cash dividends at
this time?
|
|
|
No
|
On July 1, 2010, Jones Corporation
had the following capital structure:
|
|
|
|
|
|
|
Common stock, par
$1,237,000 authorized shares,
152,000 issued and outstanding |
$
|
152,000
|
|
|
Additional paid-in
capital
|
|
82,000
|
|
|
Retained earnings
|
|
192,000
|
|
|
Treasury stock
|
|
None
|
|
|
|
|||
|
Required:
|
|
Complete the following table based
on three independent cases involving stock transactions (Round your par value answers to 2 decimal places. Omit the
"$" sign in your response):
|
|
Case 1:
|
The board of directors declared
and issued a 10 percent stock dividend when the stock price was $8 per share.
|
|
Case 2:
|
The board of directors declared
and issued a 100 percent stock dividend when the stock price was $8 per
share.
|
|
Case 3:
|
The board of directors voted a
2-for-1 stock split. The stock price prior to the split was $8 per share.
|
|
|
|
|
|
Case 1
|
Case 2
|
Case 3
|
|
Items
|
Before
Stock Transactions |
After
10%
Stock Dividend |
After
100%
Stock Dividend |
After
Stock Split |
||
|
Number of shares
outstanding
|
|
|
|
|
|
|
|
Par per share
|
$
|
1
|
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
Common Stock
|
$
|
|
|
$
|
$
|
$
|
|
Additional Paid-in
Capital
|
|
82,000
|
|
|
|
|
|
Retained Earnings
|
|
192,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity
|
$
|
|
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
|
||||||
|
The 2008 annual
report for Fortune Brands, the seller of Pinnacle golf balls and MasterLock
padlocks, disclosed that 750 million shares of common stock have been
authorized. At the end of 2007, 221 million shares had been issued and the
number of shares in treasury stock was 83 million. During 2008, 4 million
common shares were reissued from treasury, and 6 million common shares were
purchased for treasury stock.
|
|
Required:
|
|
(a)
|
Determine the number of common
shares issued at the end of 2008. (Enter your
answer in millions.)
|
|
Issued stock
|
|
|
(b)
|
Determine the number of common
shares in treasury at the end of 2008. (Enter your
answer in millions.)
|
|
Treasury stock
|
|
|
(c)
|
Determine the number of common
shares outstanding at the end of 2008. (Enter your
answer in millions.)
|
|
Shares outstanding
|
|
|
GE buys back 305,000 shares of its
stock from investors at $50 a share. Two years later it reissues this stock
for $70 a share. The stock reissue would be recorded as (rounded):
|
|
|
|
|
|
|
|
|
|
|
a debit to Cash of $21.35 million
and a credit to Treasury Stock of $21.35 million.
|
|
|
|
|
|
The balance sheet for Crutcher
Corporation reported 142,500 shares outstanding, 235,000 shares authorized,
and 14,000 shares in treasury stock
|
|
Required:
|
|
Compute the maximum number of new
shares that Crutcher could issue.
|
|
Maximum number of new
shares
|
|
|
IBM issues 200,000 shares of stock
with a par value of $0.16 for $165 per share. Three years later, it
repurchases these shares for $95 per share. IBM records the repurchase in
which of the following ways?
|
|
|
Debit Treasury Stock for $19.00
million and credit Cash for $19.00 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On January 2, Daniel Harrison
contributed $25,000 to start his business. At the end of the year, the
business had generated $38,100 in sales revenues, incurred $22,860 in
operating expenses, and distributed $4,400 for Daniel to use to pay some
personal expenses.
|
|
Required:
|
|
(a)
|
Prepare a statement of owner's
equity, assuming this is a sole proprietorship. (Leave
no cells blank - be certain to enter "0" wherever required. Amounts
to be deducted should be indicated with minus sign. Omit the "$"
sign in your response.)
|
|
Statement
of Owner's Equity
|
|
|
Daniel Harrison,
capital, beginning of year
|
$
|
|
: Capital
contributions
|
|
|
: Net income for year
|
|
|
|
|
|
|
|
|
: Withdrawals for year
|
|
|
|
|
|
Daniel Harrison,
capital, end of year
|
$
|
|
|
|
|
|
|
|
(b)
|
Prepare the section of the balance
sheet showing his owner's equity, assuming this is a sole proprietorship. (Omit the "$" sign in your response.)
|
|
Balance
Sheet (partial)
Owner's Equity |
|
|
Daniel Harrison, Capital
|
$
|
|
|
|
|
(c)
|
Prepare the section of the balance
sheet showing his stockholder's equity, assuming this is a corporation with
no-par value stock. (Omit the "$" sign
in your response.)
|
|
Balance
Sheet (partial)
Stockholder's Equity |
|
|
Common stock
|
$
|
|
Retained earnings
|
|
|
|
|
|
Total stockholders'
equity
|
$
|
|
Fonthouse Corp. issues 14,000
shares of $4.00, no-par value preferred stock for cash at $62.00 per share.
|
rev: 03-03-2011
16.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
The journal entry to record the
transaction will consist of a debit to Cash for $868,000 and a credit (or
credits) to:
|
rev: 03-03-2011
|
|
Investment in Fonthouse Stock for
$868,000.
|
|
|
Preferred Stock for $868,000.
|
|
|
Preferred Stock for $728,000 and
Additional Paid-In Capital for $168,000.
|
|
|
Preferred Stock for $728,000 and
Retained Earnings for $168,000.
|
17.
value:
10.00 points
10.00 points
You
received credit for this question in a previous attempt|
If the company pays the fixed
dividend on the preferred stock, the transaction will:
|
rev: 03-03-2011
|
|
decrease Preferred stock by
$56,000.
|
|
|
decrease Retained earnings by
$868,000.
|
|
|
increase Liabilities by $56,000.
|
|
|
decrease Cash by $56,000.
|
|
A company sells 1 million shares
of common stock with a par value of $0.14 for $16.20 a share. To record the
transaction, the company would:
|
|
|
|
|
|
|
debit Cash for $16.20 million and
credit Common Stock for $16.20 million.
|
|
|
|
debit Cash for $140,000 and credit
Common Stock for $140,000.
|
|
|
|
|
|
On February 16, a company declares
a 36¢ dividend to be paid on April 5. There are 2.02 million shares of common
stock issued and 102,000 shares of treasury stock. What does the company
record in February?
|
|
|
A debit to Dividends Declared and
a credit to Dividends Payable for $727,200.
|
|
|
A debit to Dividends Declared and
a credit to Dividends Payable for $690,480.
|
|
|
A debit to Dividends Payable and a
credit to Cash for $727,200.
|
|
|
A debit to Dividends Payable and a
credit to Cash for $690,480.
|
|
To reduce its stock price, Shriver
Food Systems, Inc., declared and issued a 35 percent stock dividend. The
company has 888,000 shares authorized and 289,100 shares outstanding. The par
value of the stock is $15 per share and the market value is $110 per share.
|
|
Required:
|
|
Prepare the journal entry to
record this large stock dividend. (Omit the
"$" sign in your response.)
|
|
General
Journal
|
Debit
|
Credit
|
|
|
|
|
|
|
|
|