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

Two years ago your corporate treasurer purchased for the firm a 20-year bond at its par value of $1,000

16.9. (Interest rate risk) Two years ago your corporate treasurer purchased for the firm a 20-year bond at its par value of $1,000. The coupon rate on this security is 8 percent. Interest payments are made to bond holders once a year. Currently, bonds of this particular risk class are yielding investors 9 percent. A cash shortage has forced you to instruct your treasurer to liquidate the bond.

a. At what price will your bond be sold? Assume annual compounding.
b. What will be the amount of your gain or loss over the original purchase price?
c. What would be the amount of your gain or loss had the treasurer originally purchased a bond with a 4-year rather than a 20-year maturity?(Assume all the characteristics of the bonds are identical except their maturity periods.)
d. What do we call this type of risk assumed by your corporate treasurer?


Click here for the solution: Two years ago your corporate treasurer purchased for the firm a 20-year bond at its par value of $1,000

On January 1, 2010, Metco, Inc., had issued an outstanding 574,600 shares of $2 par value common stock

On January 1, 2010, Metco, Inc., had issued an outstanding 574,600 shares of $2 par value common stock. On March 15, 2010, Metco, Inc., purchased for its treasury 4,400 shares of its common stock at a price of $75 per share. On August 10, 2010, 1,400 of these treasury shares were sold for $84 per share. Metco’s directors declared cash dividends of $1.20 per share during the second quarter and again during the fourth quarter, payable on June 30, 2010, and December 31, 2010, respectively. A 2% stock dividend was issued at the end of the year. There were no other transactions affecting common stock during the year.

Required:
a. Use the horizontal model (or write the entry) to show the effect of the treasury stock purchase on March 15, 2010.
b. Calculate the total amount of the cash dividends paid in the second quarter.
c. Use the horizontal model (or write the entry) to show the effect of the sale of the treasury stock on August 10, 2010.
d. Calculate the total amount of cash dividends paid in the fourth quarter.
e. Calculate the number of shares of stock issued in the stock dividend.

Click here for the solution: On January 1, 2010, Metco, Inc., had issued an outstanding 574,600 shares of $2 par value common stock

Anderson Corporation was organized early in 2000

Anderson Corporation was organized early in 2000. The articles of incorporation authorize 30,000 shares of $100 par value, 10% cumulative preferred stock and 600,000 shares of $5 par value common stock. The following transactions affecting stockholders’ equity were completed during the first year:

1. Issued 50 shares of preferred stock at par value as payment for legal services.
2. Issued 4,000 shares of common stock at $20 per share and 800 shares of preferred stock at par.
3. Exchanged 10,000 shares of common stock for land with an appraised value of $120,000 and a building with an appraised value of $90,000
4. Declared the required cash dividend on preferred stock and a $2 per share dividend on common stock.
5. Closed the $200,000 credit balance in the Income Summary Account.

Required
a. Prepare journal entries to record these transactions.
b. Prepare the stockholders’ equity section of the balance sheet.

Click here for the solution: Anderson Corporation was organized early in 2000