acct 212 exam 1

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Exercise 13-2 Accounting for par, stated, and no-par stock issuances L.O. P1

Aloha Corporation issues 10,000 shares of its common stock for $134,200 cash on February 20.

1.

Assume the stock has neither par nor stated value. Prepare journal entries to record this event. (Omit the “$” sign in your response.)

2.

Assume the stock has a $12 par value. Prepare journal entries to record this event. (Omit the “$” sign in your response.)

3.

Assume the stock has an $6.0 stated value. Prepare journal entries to record this event. (Omit the “$” sign in your response.)

Worksheet

Exercise 13-2 Accounting for par, stated, and no-par stock issuances L.O. P1

2.

award:
3 out of
3.00 points

Exercise 13-4 Stock issuance for noncash assets L.O. P1

Soku Company issues 18,000 shares of $9 par value common stock in exchange for land and a building. The land is valued at $238,000 and the building at $365,000.

Prepare the journal entry to record issuance of the stock in exchange for the land and building. (Omit the “$” sign in your response.)

Worksheet

Exercise 13-4 Stock issuance for noncash assets L.O. P1

3.

award:
2.50 out of
3.00 points

Exercise 13-6 Stock dividends and splits L.O. P2

On June 30, 2011, Quinn Corporation’s common stock is priced at $26.0 per share before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.

Common stock—$6 par value, 90,000 shares authorized,
36,000 shares issued and outstanding

$

216,000

Paid-in capital in excess of par value, common stock

100,000

Retained earnings

316,000

Total stockholders’ equity

$

632,000

Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about stockholders’ equity as it exists after issuing the new shares.

1a.

What is the retained earnings balance?(Omit the “$” sign in your response.)

1b.

What is the amount of total stockholders’ equity?(Omit the “$” sign in your response.)

1c.

How many shares are outstanding?

Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1. Answer these questions about stockholders’ equity as it exists after issuing the new shares.

2a.

What is the retained earnings balance?(Omit the “$” sign in your response.)

2b.

What is the amount of total stockholders’ equity?(Omit the “$” sign in your response.)

2c.

How many shares are outstanding?

4

award:
3 out of
3.00 points

Exercise 13-8 Dividends on common and noncumulative preferred stock L.O. C2

Wade’s outstanding stock consists of 45,000 shares of noncumulative 8.40% preferred stock with a $10 par value and also 112,500 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.

2011

$

30,000

2012

22,000

2013

100,000

2014

197,000

Determine the amount of dividends paid each year to each of the two classes of stockholders. (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

Compute the total dividends paid to each class for the four years combined. (Omit the “$” sign in your response.)

Worksheet

Exercise 13-8 Dividends on common and noncumulative preferred stock L.O. C2

5.

award:
3 out of
3.00 points

Exercise 13-9 Dividends on common and cumulative preferred stock L.O. C2

Wade’s outstanding stock consists of 48,000 shares of cumulative 7.00% preferred stock with a $10 par value and also 120,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.

2011

$

27,000

2012

28,725

2013

66,100

2014

98,600

Determine the amount of dividends paid each year to each of the two classes of stockholders. (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

Determine the total dividends paid to each class for the four years combined. (Omit the “$” sign in your response.)

Worksheet

Exercise 13-9 Dividends on common and cumulative preferred stock L.O. C2

6.

award:
3 out of
3.00 points

Exercise 13-11 Preparing a statement of retained earnings L.O. C3

The following information is available for Ballard Company for the year ended December 31, 2011.

a.

Balance of retained earnings, December 31, 2010, prior to discovery of error, $860,000.

b.

Cash dividends declared and paid during 2011, $27,000.

c.

It neglected to record 2009 depreciation expense of $39,600, which is net of $5,600 in income taxes.

d.

The company earned $210,000 in 2011 net income.

Prepare a 2011 statement of retained earnings for Ballard Company. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

Worksheet

Exercise 13-11 Preparing a statement of retained earnings L.O. C3

7.

award:
3 out of
3.00 points

Exercise 13-12 Earnings per share L.O. A1

Guess Company reports $1,325,000 of net income for 2011 and declares $185,500 of cash dividends on its preferred stock for 2011. At the end of 2011, the company had 390,000 weighted-average shares of common stock.

1.

What amount of net income is available to common stockholders for 2011?(Omit the “$” sign in your response.)

2.

What is the company’s basic EPS for 2011?(Round your answer to 2 decimal places. Omit the “$” sign in your response.)

8.

award:
3 out of
3.00 points

Exercise 13-13 Earnings per share L.O. A1

Franklin Company reports $1,475,000 of net income for 2011 and declares $206,500 of cash dividends on its preferred stock for 2011. At the end of 2011, the company had 250,000 weighted-average shares of common stock.

1.

What amount of net income is available to common stockholders for 2011? (Omit the “$” sign in your response.)

2.

What is the company’s basic EPS for 2011? (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

Worksheet

9.

award:
2.40 out of
3.00 points

Exercise 13-14 Dividend yield computation and interpretation L.O. A3

Company

Annual Cash
Dividend per Share

Market Value
per Share

1

$

13.00

$

173.33

2

10.00

107.53

3

11.90

120.20

4

1.90

127.60

Compute the dividend yield for each of these four separate companies. (Round your answers to 1 decimal place. Omit the “%” sign in your response.)

Which company’s stock would probably not be classified as an income stock?

10.

award:
3 out of
3.00 points

Exercise 13-15 Price-earnings ratio computation and interpretation L.O. A2

Company

Earnings
per Share

Market Value
per Share

1

$

10.00

$

160.00

2

8.00

81.60

3

6.00

79.20

4

43.00

301.00

Compute the price-earnings ratio for each of these four separate companies. (Round your answers to 1 decimal place.)

Which stock might an analyst likely investigate as being potentially undervalued by the market?

Company 4 .gif” alt=”correct”>
Worksheet

Exercise 13-15 Price-earnings ratio computation and interpretation L.O. A2

12.

award:
2.70 out of
3.00 points

Exercise 13-17 Accounting for equity under IFRS L.O. C3, P1

Unilever Group reports the following equity information for the years ended December 31, 2007 and 2008 (euros in millions).

December 31

2008

2007

Share capital

488

488

Share premium

126

167

Other reserves

(6,459

)

(3,415

)

Retained profit

15,813

15,175

Shareholders’ equity

9,968

12,415

1.

Match each of the three account titles share capital, share premium, and retained profit with the usual account title applied under U.S. GAAP.

2.

Prepare Unilever’s journal entry, using its account titles, to record the issuance of capital stock assuming that its entire par value stock was issued on December 31, 2007, for cash. (Enter answers in millions of euros and not in whole euros. Omit the “€” sign in your response.)

3.

What were Unilever’s 2008 dividends assuming that only dividends and income impacted retained profit for 2008 and that its 2008 income totaled €2,681? (Enter answers in millions of euros and not in whole euros. Omit the “€” sign in your response.)

13.

award:
2.40 out of
3.00 points

Exercise 14-1 Recording bond issuance and interest L.O. P1

On January 1, 2011, Kidman Enterprises issues bonds that have a $1,600,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31. The bonds are sold at par.

1.

How much interest will Kidman pay (in cash) to the bondholders every six months? (Do not round intermediate calculations. Omit the “$” sign in your response.)

Semiannual cash interest payment

$ 3,200 .gif” alt=”incorrect”>

2.

Prepare journal entries for the following.

(a)

The issuance of bonds on January 1, 2011. (Omit the “$” sign in your response.)

(b)

The first interest payment on June 30, 2011. (Do not round intermediate calculations. Omit the “$” sign in your response.)

(c)

The second interest payment on December 31, 2011. (Do not round intermediate calculations. Omit the “$” sign in your response.)

General Journal

Debit

Credit

Bond interest expense .gif” alt=”correct”>

3,200 .gif” alt=”incorrect”>

Cash .gif” alt=”correct”>

3,200 .gif” alt=”incorrect”>

3.

Prepare the journal entry for issuance of bonds assuming.

(a)

The bonds are issued at 98. (Omit the “$” sign in your response.)

(b)

The bonds are issued at 102. (Omit the “$” sign in your response.)

Worksheet

Exercise 14-1 Recording bond issuance and interest L.O. P1

Worksheet

Exercise 13-17 Accounting for equity under IFRS L.O. C3, P1

14.

award:
2 out of
3.00 points

Exercise 14-6 Recording bond issuance and premium amortization L.O. P1, P3

Jobbs Company issues 6%, five-year bonds, on December 31, 2010, with a par value of $98,000 and semiannual interest payments.

Semiannual Period-End

Unamortized Premium

Carrying Value

(0)

12/31/2010

$

8,071

$

106,071

(1)

6/30/2011

7,264

105,264

(2)

12/31/2011

6,457

104,457

Use the above straight-line bond amortization table and prepare journal entries for the following.

(a)

The issuance of bonds on December 31, 2010. (Omit the “$” sign in your response.)

(b)

The first interest payment on June 30, 2011. (Omit the “$” sign in your response.)

(c)

The second interest payment on December 31, 2011. (Omit the “$” sign in your response.)

Worksheet

Exercise 14-6 Recording bond issuance and premium amortization L.O. P1, P3

16.

award:
3 out of
3.00 points

Exercise 15-1 Accounting for short-term held to-maturity securities L.O. P2

Prepare journal entries to record the following transactions involving the short-term securities investments of Maxwell Co., all of which occurred during year 2011.

a.

On February 15, paid $274,000 cash to purchase FTR’s 90-day short-term debt securities ($274,000 principal), dated February 15, that pay 8% interest (categorized as held-to-maturity securities). (Omit the “$” sign in your response.)

b.

On May 16, received a check from FTR in payment of the principal and 90 days’ interest on the debt securities purchased in transaction a. (Do not round your intermediate calculations. Use 360 days a year. Omit the “$” sign in your response.)

Worksheet

Exercise 15-1 Accounting for short-term held to-maturity securities L.O. P2

17.

award:
3 out of
3.00 points

Exercise 15-2 Accounting for short-term trading securities L.O. P1

Prepare journal entries to record the following transactions involving the short-term securities investments of Smart Co., all of which occurred during year 2011.

a.

On March 22, purchased 720 shares of FIX Company stock at $19 per share plus a $230 brokerage fee. These shares are categorized as trading securities. (Omit the “$” sign in your response.)

b.

On September 1, received a $4 per share cash dividend on the FIX Company stock purchased in transaction a. (Omit the “$” sign in your response.)

c.

On October 8, sold 360 shares of FIX Co. stock for $29 per share, less a $220 brokerage fee. (Do not round your intermediate calculations. Omit the “$” sign in your response.)

Worksheet

Exercise 15-2 Accounting for short-term trading securities L.O. P1

19.

award:
3 out of
3.00 points

Exercise 15-6 Accounting for trading securities L.O. P1

Forex Co. purchases various investments in trading securities at a cost of $75,000 on December 27, 2011. (This is its first and only purchase of such securities.) At December 31, 2011, these securities had a fair value of $84,000.

1.

Prepare the December 31, 2011, year-end adjusting entry for the trading securities’ portfolio. (Omit the “$” sign in your response.)

2.

Prepare the January 3, 2012, entry when Forex sells a portion of its trading securities (that had originally cost $37,500) for $39,750. (Omit the “$” sign in your response.)

Worksheet

Exercise 15-6 Accounting for trading securities L.O. P1

20.

award:
3 out of
3.00 points

Exercise 15-7 Adjusting available-for-sale securities to fair value L.O. P3

On December 31, 2011, Rollo Company held the following short-term investments in its portfolio of available-for-sale securities. Rollo had no short-term investments in its prior accounting periods.

Cost

Fair Value

Vicks Corporation bonds payable

$

66,500

$

61,100

Pace Corporation notes payable

54,000

46,100

Lake Lugano Company common stock

86,500

83,900

Prepare the December 31, 2011, adjusting entry to report these investments at fair value. (Omit the “$” sign in your response.)

Worksheet

Exercise 15-7 Adjusting available-for-sale securities to fair value L.O. P3

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