E 19-9 Employee share purchase plan
In order to encourage employee ownership of the company's $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 15% discount. During March, employees purchased 50,000 shares at a time when the market price of the shares on the New York Stock Exchange was $12 per share.
Required:
Prepare the appropriate journal entry to record the March purchases of shares under the employee share purchase plan.
Click here for the solution: In order to encourage employee ownership of the company's $1 par common shares, Washington Distribution permits any of its employees
Showing posts with label shares. Show all posts
Showing posts with label shares. Show all posts
Tuesday, November 10, 2015
On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years
E 19-2 Restricted stock award plan
On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. On the grant date, the shares have a market price of $2.50 per share.
Required:
1. Determine the total compensation cost pertaining to the restricted shares.
2. Prepare the appropriate journal entry to record the award of restricted shares on January 1, 2011.
3. Prepare the appropriate journal entry to record compensation expense on December 31, 2011.
4. Prepare the appropriate journal entry to record compensation expense on December 31, 2012.
5. Prepare the appropriate journal entry to record compensation expense on December 31, 2013.
6. Prepare the appropriate journal entry to record the lifting of restrictions on the shares at December 31, 2013.
Click here for the solution: On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years
On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. On the grant date, the shares have a market price of $2.50 per share.
Required:
1. Determine the total compensation cost pertaining to the restricted shares.
2. Prepare the appropriate journal entry to record the award of restricted shares on January 1, 2011.
3. Prepare the appropriate journal entry to record compensation expense on December 31, 2011.
4. Prepare the appropriate journal entry to record compensation expense on December 31, 2012.
5. Prepare the appropriate journal entry to record compensation expense on December 31, 2013.
6. Prepare the appropriate journal entry to record the lifting of restrictions on the shares at December 31, 2013.
Click here for the solution: On January 1, 2011, VKI Corporation awarded 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years
Wednesday, October 14, 2015
On January 4, 2011, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock
P 12-10 Fair value option; equity method investments
[This problem is a variation of Problem 12-9 focusing on the fair value option.]
On January 4, 2011, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2011, and Lavery reported net income of $160 million for the year ended December 31, 2011. The market value of Lavery's common stock at December 31, 2011, was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and:
a. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.
b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.
Required:
1. Prepare all appropriate journal entries related to the investment during 2011, assuming Runyan accounts for this investment under the fair value option and accounts for the Lavery investment in a manner similar to what they would use for trading securities.
2. What would be the effect of this investment on Runyan's 2011 net income?
Click here for the solution: On January 4, 2011, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock
[This problem is a variation of Problem 12-9 focusing on the fair value option.]
On January 4, 2011, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2011, and Lavery reported net income of $160 million for the year ended December 31, 2011. The market value of Lavery's common stock at December 31, 2011, was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and:
a. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.
b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.
Required:
1. Prepare all appropriate journal entries related to the investment during 2011, assuming Runyan accounts for this investment under the fair value option and accounts for the Lavery investment in a manner similar to what they would use for trading securities.
2. What would be the effect of this investment on Runyan's 2011 net income?
Click here for the solution: On January 4, 2011, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock
On December 31, 2003, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding
3. On December 31, 2003, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding. All shares were sold for $7.50. On June 30, 2004, the firm issued an additional $135,000 shares for $7.00 per share. The 2004 income was $319,200. On September 1, 2005, a 15 percent stock dividend was issued to all common shareholders. On October 1, 2005, 60,000 shares were reacquired as treasury shares. Net income in 2005 was $278,063.
1) Compute the weighted average number of common shares outstanding for 2004 and 2005 that should be shown on comparative statements at the end of 2005.
2) Compute the basic earnings per share in 2004 and 2005 to be reported on comparative statements at the end of 2005.
Click here for the solution: On December 31, 2003, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding
1) Compute the weighted average number of common shares outstanding for 2004 and 2005 that should be shown on comparative statements at the end of 2005.
2) Compute the basic earnings per share in 2004 and 2005 to be reported on comparative statements at the end of 2005.
Click here for the solution: On December 31, 2003, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding
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
Sunday, September 6, 2015
On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares
P 19-13
(Note: This is a variation of the previous problem, modified to include stock options.)
On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2011.
On February 28, 2011, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2011, was $2,100,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
Required:
Compute Dow's earnings per share for the year ended December 31, 2011.
Click here for the solution: On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares
(Note: This is a variation of the previous problem, modified to include stock options.)
On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2011.
On February 28, 2011, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2011, was $2,100,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
Required:
Compute Dow's earnings per share for the year ended December 31, 2011.
Click here for the solution: On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares
In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2011, was $2,100,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
On July 12, 2009, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2011.
Click here for the solution: In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
On July 12, 2009, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2011.
Click here for the solution: In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
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
Sunday, August 23, 2015
Fashionista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares $2 par common stock outstanding
P12-32A Computing dividends on preferred and common stock.
Fashionista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares $2 par common stock outstanding. During a three-year period, Fashionista declared and paid cash dividends as follows: 2010, $3,000; 2011, $13,000; and 2012, $17,000.
Requirements:
Compute the total dividends to preferred and to common for each of the three years if
a. preferred is noncumulative.
b. referred is cumulative,
For requirement 1.b., journalize the declaration of the 2012 dividends on December 22, 2012, and payment on January 14,2013. Use separate Dividends payable accounts for preferred and common.
Click here for the solution: Fashionista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares $2 par common stock outstanding
Fashionista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares $2 par common stock outstanding. During a three-year period, Fashionista declared and paid cash dividends as follows: 2010, $3,000; 2011, $13,000; and 2012, $17,000.
Requirements:
Compute the total dividends to preferred and to common for each of the three years if
a. preferred is noncumulative.
b. referred is cumulative,
For requirement 1.b., journalize the declaration of the 2012 dividends on December 22, 2012, and payment on January 14,2013. Use separate Dividends payable accounts for preferred and common.
Click here for the solution: Fashionista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares $2 par common stock outstanding
The balance sheet of Lennox Health Foods, at December 31, 2011 reported 120,000 shares of no-par common stock authorized
P13-25A Journalizing dividend and treasury stock transactions, and preparing stockholders' equity
The balance sheet of Lennox Health Foods, at December 31, 2011 reported 120,000 shares of no-par common stock authorized, with 25,000 shares issued and a Common stock balance of $190,000. Retained earnings had a balance of $115,000. During 2012, the company completed the following selected transactions:
Mar 15 - Purchased 9,000 shares of treasury stock at $8 per share.
Apr 30 - Distributed a 10% stock dividend on the outstanding shares of common stock. The market value of common stock was $9 per share.
Dec 31 - Earned net income of $110,000 during the year. Closed net income to Retained
Requirements:
Record the transactions in the general journal. Explanations are not required. Prepare the stockholders' equity section of Lennox Health Foods' balance sheet at December 31, 2012.
Click here for the solution: The balance sheet of Lennox Health Foods, at December 31, 2011 reported 120,000 shares of no-par common stock authorized
The balance sheet of Lennox Health Foods, at December 31, 2011 reported 120,000 shares of no-par common stock authorized, with 25,000 shares issued and a Common stock balance of $190,000. Retained earnings had a balance of $115,000. During 2012, the company completed the following selected transactions:
Mar 15 - Purchased 9,000 shares of treasury stock at $8 per share.
Apr 30 - Distributed a 10% stock dividend on the outstanding shares of common stock. The market value of common stock was $9 per share.
Dec 31 - Earned net income of $110,000 during the year. Closed net income to Retained
Requirements:
Record the transactions in the general journal. Explanations are not required. Prepare the stockholders' equity section of Lennox Health Foods' balance sheet at December 31, 2012.
Click here for the solution: The balance sheet of Lennox Health Foods, at December 31, 2011 reported 120,000 shares of no-par common stock authorized
Friday, August 21, 2015
On January 1, Armada Corporation had 95,000 shares of no-par common stock issued and outstanding
E12-8 On January 1, Armada Corporation had 95,000 shares of no-par common stock issued
and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.
Apr. 1 Issued 15,000 additional shares of common stock for $17 per share.
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 Paid the $1 cash dividend.
Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.
Dec. 15 Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of
record on December 31.
Instructions
(a) Prepare the entries, if any, on each of the three dividend dates.
(b) How are dividends and dividends payable reported in the financial statements prepared at
December 31?
Click here for the solution: On January 1, Armada Corporation had 95,000 shares of no-par common stock issued and outstanding
and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.
Apr. 1 Issued 15,000 additional shares of common stock for $17 per share.
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 Paid the $1 cash dividend.
Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.
Dec. 15 Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of
record on December 31.
Instructions
(a) Prepare the entries, if any, on each of the three dividend dates.
(b) How are dividends and dividends payable reported in the financial statements prepared at
December 31?
Click here for the solution: On January 1, Armada Corporation had 95,000 shares of no-par common stock issued and outstanding
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
Saturday, July 11, 2015
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
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
Friday, July 3, 2015
Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation
Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation, a young firm with a high growth rate of earnings. The acquisitions analysis group at DM has produced the following table of relevant data:
Dublin Medical Arlington
Earnings per share $3.00 $2.00
Dividend per share $3.00 $.80
Number of shares 200 million 10 million
Stock price $30 $20
DM's analysts estimate that investors currently expect growth of about 6% per year in Arlington's earnings and dividends. They assume that with the improvements in management that DM could bring to Arlington, its growth rate would be 10% per year beginning one year from now with no additional investment outlays beyond those already expected.
1. What is the expected gain from the acquisition?
2. What is the net present value (NPV) of the acquisition to DM shareholders if it costs an average $30 per share to acquire all of the outstanding shares?
3. Would it matter to DM's shareholders whether the shares of Arlington stock are acquired by paying cash or DM stock?
Click here for the solution: Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation
Dublin Medical Arlington
Earnings per share $3.00 $2.00
Dividend per share $3.00 $.80
Number of shares 200 million 10 million
Stock price $30 $20
DM's analysts estimate that investors currently expect growth of about 6% per year in Arlington's earnings and dividends. They assume that with the improvements in management that DM could bring to Arlington, its growth rate would be 10% per year beginning one year from now with no additional investment outlays beyond those already expected.
1. What is the expected gain from the acquisition?
2. What is the net present value (NPV) of the acquisition to DM shareholders if it costs an average $30 per share to acquire all of the outstanding shares?
3. Would it matter to DM's shareholders whether the shares of Arlington stock are acquired by paying cash or DM stock?
Click here for the solution: Dublin Medical (DM), a large established corporation with no growth in its real earnings, is considering acquiring 100% of the shares of Arlington Corporation
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