Question 1 During its first year of operations, Collin Raye Corporation had the following transactions pertaining to its common stock.
Jan. 10Issued 80,000 shares for cash at $6 per share.
Mar. 1Issued 5,000 shares to attorneys in payment of a bill for $35,000 for services rendered in helping the company to incorporate.
1-JulIssued 30,000 shares for cash at $8 per share.
Sept. 1Issued 60,000 shares for cash at $10 per share.
(a) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.
(b) Prepare the journal entries for these transactions, assuming that the common stock is no-par with a stated value of $3 per share.
Question 2 Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2014, Lindsey Hunter took part in the following selected transactions. 1 Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000. 2 Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance. 3 Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2010 at $40 per share. (a) Prepare the journal entry to record item 1. (b) Prepare the journal entry to record item 2. (c) Prepare the journal entry to record item 3 using the cost method.
Question 3 The stockholders’ equity accounts of G.K. Chesterton Company have the following balances on December 31, 2014.
Common stock, $10 par, 300,000 shares issued and outstanding $3,000,000, Paid-in capital in excess of par—common stock 1,200,000, Retained earnings 5,600,000. Shares of G.K. Chesterton Company stock are currently selling on the Midwest Stock Exchange at $37.
Prepare the appropriate journal entries for each of the following cases.
(a) A stock dividend of 5% is (1) declared and (2) issued.
(b) A stock dividend of 100% is (1) declared and (2) issued.
(c) A 2-for-1 stock split is (1) declared and (2) issued.
Question 4 Anne Cleves Company reported the following amounts in the stockholders’ equity section of its December 31, 2013, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 2,000 shares issued) $200,000. Common stock, $5 par (100,000 shares authorized, 20,000 shares issued) 100,000. Additional paid-in capital 125,000. Retained earnings 450,000. Total $875,000
During 2014, Cleves took part in the following transactions concerning stockholders’ equity.
1. Paid the annual 2013 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2013.
2. Purchased 1,700 shares of its own outstanding common stock for $40 per share. Cleves uses the cost method.
3. Reissued 700 treasury shares for land valued at $30,000.
4. Issued 500 shares of preferred stock at $105 per share.
5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share.
6. Issued the stock dividend.
7. Declared the annual 2014 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2015.
(a) Prepare journal entries to record the transactions described above.
(b) Prepare the December 31, 2014, stockholders’ equity section. Assume 2014 net income was $330,000.Question 5 Aubrey Inc. issued $4,000,000 of 10%, 10-year convertible bonds on June 1, 2014, at 98 plus accrued interest. The bonds were dated April 1, 2014, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2015, $1,500,000 of these bonds were converted into 30,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2014. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2015. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.
Question 6 Illiad Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $136,000, and the value of the warrants in the market is $24,000. The bonds sold in the market at issuance for $152,000.
(a) What entry should be made at the time of the issuance of the bonds and warrants?
b) Prepare the entry if the warrants were nondetachable.
The post Question 1 during its first year of operations, collin raye appeared first on oneacademyessays.
Hi there! Click one of our representatives below and we will get back to you as soon as possible.