Listed below are a few events and transactions of Kodax Company. 2013 Jan. 2 Purchased 23,000 shares of Grecco Co. common stock for $410,000 cash plus a broker’s fee of $3,200 cash. Grecco Co. has 92,000 shares of common stock outstanding and its policies will be significantly influenced by Kodax. Sept. 1 Grecco declared and paid a cash dividend of $1.70 per share. Dec. 31 Grecco announced that net income for the year is $489,900. 2014 June 1 Grecco declared and paid a cash dividend of $2.30 per share. Dec. 31 Grecco announced that net income for the year is $705,400. Dec. 31 Kodax sold 9,000 shares of Grecco for $330,000 cash. Prepare journal entries to record the above transactions and events of Kodax Company. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to the nearest dollar amount.)

Listed below are a few events and transactions of Kodax Company.
  

2013
Jan.	2		Purchased 23,000 shares of Grecco Co. common stock for $410,000 cash plus a broker’s fee of $3,200 cash. Grecco Co. has 92,000 shares of common stock outstanding and its policies will be significantly influenced by Kodax.
Sept.	1		Grecco declared and paid a cash dividend of $1.70 per share.
Dec.	31		Grecco announced that net income for the year is $489,900.

  

2014
June	1		Grecco declared and paid a cash dividend of $2.30 per share.
Dec.	31		Grecco announced that net income for the year is $705,400.
Dec.	31		Kodax sold 9,000 shares of Grecco for $330,000 cash.

  

Prepare journal entries to record the above transactions and events of Kodax Company. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to the nearest dollar amount.)

 

Explanation:

Jan. 2, 2013	Record purchase of investment ($410,000 + $3,200) = $413,200.
	Long-Term Investments—Grecco:
	Kodax’s investment equals 25% of Grecco’s stock (23,000/92,000).
	Kodax should use the equity method to account for its investment.

    

Sept. 1, 2013

Record receipt of cash dividend (23,000 × $1.70) = $39,100.

    

Dec. 31, 2013

Record equity in investee earnings ($489,900 × (23,000/92,000)) = $122,475.

    

June 1, 2014

Record receipt of cash dividend (23,000 × $2.30) = $52,900.

    

Dec. 31, 2014

Record equity in investee earnings ($705,400 × (23,000/92,000)) = $176,350

    

Dec. 31, 2014

Record sale of investment.

    

Book value (Grecco Co. stock) at 12/31/2014:
Original cost	$	413,200
Less 2013 dividends		(39,100	)
Plus share of 2013 earnings		122,475
Less 2014 dividends		(52,900	)
Plus share of 2014 earnings		176,350
Book value at date of sale	$	620,025
Book value of shares sold ($620,025 × [9,000/23,000])	$	242,618	†

     ^†Rounded to nearest dollar.

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations. General Journal Debit Credit a. Cash 260,000 Common Stock, $25 Par Value 240,000 Paid-In Capital in Excess of Par Value, Common Stock 20,000 b. Organization Expenses 190,000 Common Stock, $25 Par Value 129,000 Paid-In Capital in Excess of Par Value, Common Stock 61,000 c. Cash 43,500 Accounts Receivable 19,000 Building 81,700 Notes Payable 59,600 Common Stock, $25 Par Value 54,600 Paid-In Capital in Excess of Par Value, Common Stock 30,000 d. Cash 125,000 Common Stock, $25 Par Value 78,000 Paid-In Capital in Excess of Par Value, Common Stock 47,000 Required: 2. How many shares of common stock are outstanding at year-end? 3. What is the amount of minimum legal capital (based on par value) at year-end? 4. What is the total paid-in capital at year-end? 5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $796,000?

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

  

	General Journal	Debit	Credit
a.	Cash	260,000
	Common Stock, $25 Par Value		240,000
	Paid-In Capital in Excess of Par Value, Common Stock		20,000
b.	Organization Expenses	190,000
	Common Stock, $25 Par Value		129,000
	Paid-In Capital in Excess of Par Value, Common Stock		61,000
c.	Cash	43,500
	Accounts Receivable	19,000
	Building	81,700
	Notes Payable		59,600
	Common Stock, $25 Par Value		54,600
	Paid-In Capital in Excess of Par Value, Common Stock		30,000
d.	Cash	125,000
	Common Stock, $25 Par Value		78,000
	Paid-In Capital in Excess of Par Value, Common Stock		47,000

Required:

2.	How many shares of common stock are outstanding at year-end?

   
  

3.	What is the amount of minimum legal capital (based on par value) at year-end?

   
  

4.	What is the total paid-in capital at year-end?

   

5.

What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $796,000? Explanation:  2.  Number of outstanding shares         Issued in (a) 9,600     Issued in (b) 5,160     Issued in (c) 2,184     Issued in (d) 3,120     Total 20,064           3. Minimum legal capital =  Outstanding shares × Par value per share = 20,064 × $25 = $501,600      4. Total contributed capital from common stockholders        From transaction (a) $ 260,000     From transaction (b) 190,000     From transaction (c) 84,600     From transaction (d) 125,000        Total contributed capital $ 659,600           5. Book value per common share              Total stockholders' equity (given) $ 796,000     Outstanding shares (from Part 2) 20,064        Book value per common share $ 39.67     ($796,000 / 20,064 shares)

Problem 2-4A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2 Santo Birch opens a Web consulting business called Show-Me-the-Money and completes the following transactions in its first month of operations.

Problem 2-4A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2

Santo Birch opens a Web consulting business called Show-Me-the-Money and completes the following transactions in its first month of operations.

March 1	Birch invests $150,000 cash along with office equipment valued at $22,000 in the company in exchange for common stock.
2	The company prepaid $6,000 cash for twelve months' rent for office space. (Hint: Debit Prepaid Rent for $6,000.)
3	The company made credit purchases for $3,000 in office equipment and $1,200 in office supplies. Payment is due within 10 days.
6	The company completed services for a client and immediately received $4,000 cash.
9	The company completed a $7,500 project for a client, who must pay within 30 days.
13	The company paid $4,200 cash to settle the account payable created on March 3.
19	The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)
22	The company received $3,500 cash as partial payment for the work completed on March 9.
25	The company completed work for another client for $3,820 on credit.
29	The company paid $5,100 cash for dividends.
30	The company purchased $600 of additional office supplies on credit.
31	The company paid $200 cash for this month's utility bill.

  

Required:
1.	Record these transactions using the following titles: Cash, Accounts Receivable, Office Supplies, Prepaid Insurance, Prepaid Rent, Office Equipment, Accounts Payable, Common Stock, Dividends, Services Revenue, and Utilities Expense. (Omit the "$" sign in your response.)

  

Date	General Journal	Debit	Credit
March 1	Cash
	Office equipment
	Common stock		172,000
2	Prepaid rent	6,000
	Cash		6,000
3	Office equipment
	Office supplies
	Accounts payable		4,200
6	Cash	4,000
	Services revenue		4,000
9	Accounts receivable	7,500
	Services revenue		7,500
13	Accounts payable	4,200
	Cash		4,200
19	Prepaid insurance	5,000
	Cash		5,000
22	Cash	3,500
	Accounts receivable		3,500
25	Accounts receivable	3,820
	Services revenue		3,820
29	Dividends	5,100
	Cash		5,100
30	Office supplies	600
	Accounts payable		600
31	Utilities expense	200
	Cash		200

  

2.

Open the ledger accounts for the account titles referred in part 1 and post the journal entries from part 1 to the ledger accounts and enter the balance after each posting. (Record the transactions in given order.Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

  

Cash
Date			Debit			Credit		Balance
March	1		150,000			0		150,000
	2		0			6,000		144,000
	6		4,000			0		148,000
	13		0			4,200		143,800
	19		0			5,000		138,800
	22		3,500			0		142,300
	29		0			5,100		137,200
	31		0			200		137,000

  

Accounts Receivable
Date			Debit			Credit		Balance
March	9		7,500			0		7,500
	22		0			3,500		4,000
	25		3,820			0		7,820

    

Office Supplies
Date			Debit			Credit		Balance
March	3		1,200			0		1,200
	30		600			0		1,800

  

Prepaid Insurance
Date			Debit			Credit		Balance
March	19		5,000			0		5,000

  

Prepaid Rent
Date			Debit			Credit		Balance
March	2		6,000			0		6,000

  

Office Equipment
Date			Debit			Credit		Balance
March	1		22,000			0		22,000
	3		3,000			0		25,000

  

Accounts Payable
Date			Debit			Credit		Balance
March	3		0			4,200		4,200
	13		4,200			0		0
	30		0			600		600

  

Common Stock
Date			Debit			Credit		Balance
March	1		0			172,000		172,000

  

Dividends
Date			Debit			Credit		Balance
March	29		5,100			0		5,100

  

Services Revenue
Date			Debit			Credit		Balance
March	6		0			4,000		4,000
	9		0			7,500		11,500
	25		0			3,820		15,320

  

Utilities Expense
Date			Debit			Credit		Balance
March	31		200			0		200

  

3.	Prepare a trial balance as of April 30. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity, Revenues, and Expenses. Omit the "$" sign in your response.)

  

SHOW-ME-THE-MONEY CONSULTANTS Trial Balance March 31
	Debit	Credit
Cash	$ 137,000
Accounts receivable	7,820
Office supplies
Prepaid insurance
Prepaid rent
Office equipment
Accounts payable		$ 600
Common stock		172,000
Dividends	5,100
Services revenue		15,320
Utilities expense	200
Totals	$ 187,920	$ 187,920