E 14-8 Investor; straight-line method
(Note: This is a variation of the previous exercise modified to consider the investor's perspective.) Universal Foods sold the entire bond issue described in the previous exercise to Wang Communications.
Required:
1. Prepare the journal entry to record the purchase of the bonds by Wang Communications on January 1, 2011.
2. Prepare the journal entry to record interest revenue on June 30, 2011.
3. Prepare the journal entry to record interest revenue on December 31, 2018.
Click here for the solution: Universal Foods sold the entire bond issue described in the previous exercise to Wang Communications
Showing posts with label issue. Show all posts
Showing posts with label issue. Show all posts
Wednesday, October 7, 2015
Sunday, September 27, 2015
Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue;
Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue; capital lease; sublease of a leased asset
“I don't see that in my intermediate accounting text I saved from college,” you explain to another member of the accounting division of Dowell Chemical Corporation. “This will take some research.” Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage.
Required:
1. After the first full year under the warehouse lease, what is the balance in Dowell's lease liability? An amortization schedule will be helpful in determining this amount.
2. After the first full year under the warehouse lease, what is the carrying amount (after accumulated depreciation) of Dowell's leased warehouses?
3. Obtain the relevant authoritative literature on accounting for derecognition of capital leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. Determine the appropriate accounting treatment for the proposed sublease. What is the specific Codification citation that Dowell would rely on to determine:
a. if the proposal to sublease will qualify as a termination of a capital lease, and
b. the appropriate accounting treatment for the sublease?
4. What, if any, journal entry would Dowell record in connection with the sublease?
Click here for the solution: Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue;
“I don't see that in my intermediate accounting text I saved from college,” you explain to another member of the accounting division of Dowell Chemical Corporation. “This will take some research.” Your comments pertain to the appropriate accounting treatment of a proposed sublease of warehouses Dowell has used for product storage.
Required:
1. After the first full year under the warehouse lease, what is the balance in Dowell's lease liability? An amortization schedule will be helpful in determining this amount.
2. After the first full year under the warehouse lease, what is the carrying amount (after accumulated depreciation) of Dowell's leased warehouses?
3. Obtain the relevant authoritative literature on accounting for derecognition of capital leases by lessees using the FASB's Codification Research System. You might gain access from the FASB website (www.fasb.org), from your school library, or some other source. Determine the appropriate accounting treatment for the proposed sublease. What is the specific Codification citation that Dowell would rely on to determine:
a. if the proposal to sublease will qualify as a termination of a capital lease, and
b. the appropriate accounting treatment for the sublease?
4. What, if any, journal entry would Dowell record in connection with the sublease?
Click here for the solution: Research 15-2 FASB codification; locate and extract relevant information and authoritative support for a financial reporting issue;
Friday, September 18, 2015
Arnold Corporation has been authorized to issue 40,000 shares of $100 par value
ACC 291 Week 4 Assignment
P11-6A Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $ 240,000 Paid-in Capital in Excess of Par Value—Preferred 56,000 Common Stock 2,000,000 Paid-in Capital in Excess of Stated Value—Common 5,700,000 Treasury Stock—Common (1,000 shares) 22,000 Paid-in Capital from Treasury Stock 3,000 Retained Earnings 560,000 The preferred stock was issued for land having a fair market value of $296,000.All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury at a per share cost of $22. In December, 500 shares of treasury stock were sold for $28 per share. No dividends were declared in 2011.
Instructions
(a) Prepare the journal entries for the:
(1) Issuance of preferred stock for land.
(2) Issuance of common stock for cash.
(3) Purchase of common treasury stock for cash.
(4) Sale of treasury stock for cash.
(b) Prepare the stockholders’ equity section at December 31, 2011
Click here for the solution: Arnold Corporation has been authorized to issue 40,000 shares of $100 par value
P11-6A Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $ 240,000 Paid-in Capital in Excess of Par Value—Preferred 56,000 Common Stock 2,000,000 Paid-in Capital in Excess of Stated Value—Common 5,700,000 Treasury Stock—Common (1,000 shares) 22,000 Paid-in Capital from Treasury Stock 3,000 Retained Earnings 560,000 The preferred stock was issued for land having a fair market value of $296,000.All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury at a per share cost of $22. In December, 500 shares of treasury stock were sold for $28 per share. No dividends were declared in 2011.
Instructions
(a) Prepare the journal entries for the:
(1) Issuance of preferred stock for land.
(2) Issuance of common stock for cash.
(3) Purchase of common treasury stock for cash.
(4) Sale of treasury stock for cash.
(b) Prepare the stockholders’ equity section at December 31, 2011
Click here for the solution: Arnold Corporation has been authorized to issue 40,000 shares of $100 par value
Wednesday, September 2, 2015
Vargas Corporation is authorized to issue 20,000 shares of $50 par value
Vargas Corporation is authorized to issue 20,000 shares of $50 par value, 10% Preferred stock and 125,000 shares of $3 par value common stock. On January 1, 2010, the ledger contained the following stockholders' equity balances.
Preferred Stock (10,000 shares) $500,000
Paid-in Capital in Excess of Par Value-Preferred 75,000
Common Stock (70,000 shares) 210,000
Paid-in Capital in Excess of Par Value-Common 700,000
Retained Earnings 300,000
During 2010, the following transactions occurred.
Feb. 1 Issued 2,000 shares of preferred stock for land having a fair market value of $125,000.
Mar. 1 Issued 1,000 shares of preferred stock for cash at $65 per share.
July 1 Issued 16,000 shares of common stock for cash at $7 per share.
Sept. 1 Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market values were preferred stock $70 and patent indeterminable.
Dec. 1 Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec. 31 Net income for the year was $260,000. No dividends were declared.
Instructions
(a) Journalize the transactions and the closing entry for net income.
(b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J2 for the posting reference.)
(c) Prepare a stockholders’ equity section at December 31, 2010.
Click here for the solution: Vargas Corporation is authorized to issue 20,000 shares of $50 par value
Preferred Stock (10,000 shares) $500,000
Paid-in Capital in Excess of Par Value-Preferred 75,000
Common Stock (70,000 shares) 210,000
Paid-in Capital in Excess of Par Value-Common 700,000
Retained Earnings 300,000
During 2010, the following transactions occurred.
Feb. 1 Issued 2,000 shares of preferred stock for land having a fair market value of $125,000.
Mar. 1 Issued 1,000 shares of preferred stock for cash at $65 per share.
July 1 Issued 16,000 shares of common stock for cash at $7 per share.
Sept. 1 Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market values were preferred stock $70 and patent indeterminable.
Dec. 1 Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec. 31 Net income for the year was $260,000. No dividends were declared.
Instructions
(a) Journalize the transactions and the closing entry for net income.
(b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J2 for the posting reference.)
(c) Prepare a stockholders’ equity section at December 31, 2010.
Click here for the solution: Vargas Corporation is authorized to issue 20,000 shares of $50 par value
Friday, August 21, 2015
At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks
E7-5 At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice. After payment, the invoice is filed by vendor and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “paid,” files them by payment date, and records the checks in the cash disbursements journal. Reyes Company maintains one checking account that is reconciled by the treasurer.
Instructions
(a) List the weaknesses in internal control over cash disbursements.
(b) Identify improvements for correcting these weaknesses.
Click here for the solution: At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks
Instructions
(a) List the weaknesses in internal control over cash disbursements.
(b) Identify improvements for correcting these weaknesses.
Click here for the solution: At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks
Thursday, August 13, 2015
Davis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 6 percent, cumulative preferred stock
Problem 8-18 (Recording and reporting stock transactions and cash dividends across two accounting cycles) Davis Corporation was authorized to issue 100,000 shares of $ 10 par common stock and 50,000 shares of $ 50 par, 6 percent, cumulative preferred stock. Davis Corporation completed the following transactions during its first two years of operation.
2012 Jan.
2 Issued 5,000 shares of $ 10 par common stock for $ 28 per share.
15 Issued 1,000 shares of $ 50 par preferred stock for $ 70 per share.
Feb. 14 Issued 15,000 shares of $ 10 par common stock for $ 30 per share.
Dec.
31 During the year, earned $ 170,000 of cash service revenue and paid $ 110,000 of cash operating expenses.
31 Declared the cash dividend on outstanding shares of preferred stock for 2012. The dividend will be paid on January 31 to stockholders of record on January 15, 2013.
2013 Jan. 31 Paid the cash dividend declared on December 31, 2012.
Mar. 1 Issued 2,000 shares of $ 50 par preferred stock for $ 58 per share.
June 1 Purchased 500 shares of common stock as treasury stock at $ 43 per share. Dec. 31 During the year, earned $ 210,000 of cash service revenue and paid $ 175,000 of cash operating expenses.
31 Declared the dividend on the preferred stock and a $ 0.60 per share dividend on the common stock.
Required
a. Organize the transaction data in accounts under an accounting equation.
b. Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.
c. Prepare the balance sheet at December 31, 2013.
Click here for the solution: Davis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 6 percent, cumulative preferred stock
2012 Jan.
2 Issued 5,000 shares of $ 10 par common stock for $ 28 per share.
15 Issued 1,000 shares of $ 50 par preferred stock for $ 70 per share.
Feb. 14 Issued 15,000 shares of $ 10 par common stock for $ 30 per share.
Dec.
31 During the year, earned $ 170,000 of cash service revenue and paid $ 110,000 of cash operating expenses.
31 Declared the cash dividend on outstanding shares of preferred stock for 2012. The dividend will be paid on January 31 to stockholders of record on January 15, 2013.
2013 Jan. 31 Paid the cash dividend declared on December 31, 2012.
Mar. 1 Issued 2,000 shares of $ 50 par preferred stock for $ 58 per share.
June 1 Purchased 500 shares of common stock as treasury stock at $ 43 per share. Dec. 31 During the year, earned $ 210,000 of cash service revenue and paid $ 175,000 of cash operating expenses.
31 Declared the dividend on the preferred stock and a $ 0.60 per share dividend on the common stock.
Required
a. Organize the transaction data in accounts under an accounting equation.
b. Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.
c. Prepare the balance sheet at December 31, 2013.
Click here for the solution: Davis Corporation was authorized to issue 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 6 percent, cumulative preferred stock
Sunday, July 12, 2015
St. Joe Trucking has sold an issue of $6 cumulative preferred stock to the public at a price of $60 per share
St. Joe Trucking has sold an issue of $6 cumulative preferred stock to the public at a price of $60 per share. After issuance costs, St. Joe netted $57 per share. The company has a marginal tax rate of 40 percent.
a. Calculate the after-tax cost of this preferred stock offering assuming that this stock is a perpetuity.
b. if the stock is callable in 5 years at $66 per share and investors expect it to be called at that time, what is the after-tax cost of this preferred stock offering? (Compute to the nearest whole percent.)
Click here for the solution: St. Joe Trucking has sold an issue of $6 cumulative preferred stock to the public at a price of $60 per share
a. Calculate the after-tax cost of this preferred stock offering assuming that this stock is a perpetuity.
b. if the stock is callable in 5 years at $66 per share and investors expect it to be called at that time, what is the after-tax cost of this preferred stock offering? (Compute to the nearest whole percent.)
Click here for the solution: St. Joe Trucking has sold an issue of $6 cumulative preferred stock to the public at a price of $60 per share
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