In 2011, Western Transport Company entered into the treasury stock transactions described below

E 18-13 Treasury stock

In 2011, Western Transport Company entered into the treasury stock transactions described below. In 2009, Western Transport had issued 140 million shares of its $1 par common stock at $17 per share.

Required:
Prepare the appropriate journal entry for each of the following transactions:
1. On January 23, 2011, Western Transport reacquired 10 million shares at $20 per share.
2. On September 3, 2011, Western Transport sold 1 million treasury shares at $21 per share.
3. On November 4, 2011, Western Transport sold 1 million treasury shares at $18 per share.


Click here for the solution: In 2011, Western Transport Company entered into the treasury stock transactions described below

In 2011, Borland Semiconductors entered into the transactions described below

E 18-12 Retirement of shares

In 2011, Borland Semiconductors entered into the transactions described below. In 2008, Borland had issued 170 million shares of its $1 par common stock at $34 per share.

Required:
Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions:
1. On January 2, 2011, Borland reacquired 10 million shares at $32.50 per share.
2. On March 3, 2011, Borland reacquired 10 million shares at $36 per share.
3. On August 13, 2011, Borland sold 1 million shares at $42 per share.
4. On December 15, 2011, Borland sold 2 million shares at $36 per share.


Click here for the solution: In 2011, Borland Semiconductors entered into the transactions described below

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity

E 18-5 Issuance of shares; noncash consideration

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.

Required:
Prepare the appropriate journal entries to record each transaction.
Feb. 12 Sold 2 million common shares, for $9 per share.
13 Issued 40,000 common shares to attorneys in exchange for legal services.
13 Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
Nov. 15 Issued 380,000 of its common shares in exchange for equipment for which the cash price was known to be $3,688,000


Click here for the solution: During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity

On March 1, 2007, Winter Company entered into a contract to build an apartment building

On March 1, 2007, Winter Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000 The information that follows pertains to the construction period:

2007 2008 2009
Costs to date: $600,000 $1,560,000 $2,100,000
Estimated costs to complete: 1,400,000 390,000 0
Progress billing to date: 1,050,000 2,100,000 3,000,000
Cash collected to date: 950,000 1,950,000 2,750,000

Instructions:
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
(b) Prepare all necessary journal entries for 2009.
(c) Prepare a partial balance sheet for December 31, 2008, showing the balances in the receivables and inventory accounts.


Click here for the solution: On March 1, 2007, Winter Company entered into a contract to build an apartment building

On March 1, 2010, Chance Company entered into a contract to build an apartment building

P18-3 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2010, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period:

2010 2011 2012
Costs to date: $600,000 $1,560,000 $2,100,000
Estimated costs to complete: 1,400,000 520,000 0
Progress billing to date: 1,050,000 2,000,000 3,000,000
Cash collected to date: 950,000 1,950,000 2,850,000

Instructions
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
(b) Prepare all necessary journal entries for 2012.
(c) Prepare a partial balance sheet for December 31, 2011, showing the balances in the receivables and inventory accounts.


Click here for the solution: On March 1, 2010, Chance Company entered into a contract to build an apartment building

Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010

Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010, to construct a four-story office building. At that time, Monat estimated that it would take between 2 and 3 years to complete the project. The total contract price for construction of the building is $4,400,000. Monat appropriately accounts for this contract under the completed-contract method in its financial statements and for income tax reporting. The building was deemed substantially completed on December 31, 2012. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to the Hyatt Clinic under the contract are shown below.

(a) Prepare schedules to compute the amount to be shown as “Cost of uncompleted contract in excess of related billings” or “Billings on uncompleted contract in excess of related costs” at December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
(b) Prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.


Click here for the solution: Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010

During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity

P 18-1 Various stock transactions; correction of journal entries

PART A

During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue 100 million common shares, $1 par per share.

Required:
Prepare the appropriate journal entries to record each transaction.

Jan. 9 Issued 40 million common shares for $20 per share.
Mar 11 Issued 5,000 shares in exchange for custom-made equipment. McCollum's shares have traded recently on the stock exchange at $20 per share.

PART B

A new staff accountant for the McCollum Corporation recorded the following journal entries during the second year of operations. McCollum retires shares that it reacquires (restores their status to that of authorized but unissued shares).

Jan 12 Land--------------------------------$2,000,000
Paid in capital-Donation of land----------------$2,000,000

Sept 1 Common stock-----------------------$2,000,000
Retained Earnings--------------------$48,000,000
Cash------------------------------------------$50,000,000

Dec 1 Cash--------------------------------$26,000,000
Common stock---------------------------------$1,000,000
Gain on sale of previously issued shares----------$25,000,000

Required:
Prepare the journal entries that should have been recorded for each of the transactions.

Click here for the solution: During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity

(Lessor and Lessee Accounting and Disclosures) Sylvan Inc. entered into a noncancelable lease arrangement with Breton Leasing Corporation for a certain machine

Case 21-2 (CA21-2) (Lessor and Lessee Accounting and Disclosures) Sylvan Inc. entered into a noncancelable lease arrangement with Breton Leasing Corporation for a certain machine. Breton's primary business is leasing; it is not a manufacturer or dealer. Sylvan will lease the machine for a period of 3 years, which is 50% of the machine's economic life. Breton will take possession of the machine at the end of the initial 3-year lease and lease it to another, smaller company that does not need the most current version of the machine. Sylvan does not guarantee any residual value of the machine and will not purchase the machine at the end of the lease term.

Sylvan's incremental borrowing rate is 10%, and the implicit rate in the lease is 9%. Sylvan has no way of knowing the implicit rate used by Brenton. Using either rate in the lease is 9%. Sylvan has no way of knowing the implicit rate used by Brenton. Using either rate, the present value of the minimum lease payments is between 90% and 100% of the fair value of the machine at the date of the lease agreement. Sylvan has agreed to pay all executor costs directly, and no allowance for the costs is included in the lease payments.

Brenton is reasonably certain that Sylvan will pay all lease payments, and because Sylvan has agreed to pay all executor cost, there are no important uncertainties regarding costs to be incurred by Breton. Assume that no indirect cost are involved.

Instructions:
(a) With respect to Sylvan (the lessee), answers the following.
(1) What type of lease has been entered into? Explain the reason for your reason.
(2) How should Sylvan compute the appropriate amount to be recorded for the else or asset acquired?
(3) What accounts will be created or affected by the transaction, and how will the lease or asst and other cost related to the transaction be matched with earnings.
(4) What disclosures must Sylvan make regarding the leased asset?
(b) With respect to Breton (the lessor). Answer the following:
(1) What type of leasing arrangement has been entered into? Explain the reason for your reason.
(2) How should the lease be recorded by Brenton, and how are the appropriate amounts determined?
(3) How should Breton determined the appropriate amount of earning to be recognized from each lease payment?
(4) What disclosures must Breton make regarding the lease?

Click here for the solution: (Lessor and Lessee Accounting and Disclosures) Sylvan Inc. entered into a noncancelable lease arrangement with Breton Leasing Corporation for a certain machine