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Book/movie review
22/08/2022
(2)
On August 31, Jenks Co. partially refunded $180,000 of its outstanding 10% note payable, made one year ago to Arma State Bank by paying $180,000 plus $18,000 interest, having obtained the $198,000 by using $52,400 cash and signing a new one-year $160,000 note discounted at 9% by the bank.
Instructions
(1) Make the entry to record the partial refunding. Assume Jenks Co. makes reversing entries when appropriate.
(2) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.
(3)
On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2020. The bonds were issued for $3,405,000 to yield 8%, resulting in bond premium of $405,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2010, Solis’s adjusted unamortized bond premium is what amount? Please show computations
(4)
Presented below is information related to Wyrick Company:
(1.) The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.
(2.) 8,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $5 per share for the common stock.
(3.) 5,000 shares of preferred stock are sold for cash at $120 per share.
(4.) The company issues 100 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $60 per share.
Instructions
Prepare the general journal entries necessary to record these transactions.
(5) The stockholder’s equity section of Lemay Corp shows the following on Dec 31, 2011:
Preferred stock- 6% $100 par, $4000 shares outstanding $400,000
Common Stock-$10 par, 60,000 shares outstanding $600,000
Paid-in capital in excess of par $200,000
Retained earnings $114,000
Total stockholders equity $1,314,000
Instructions:
Assuming that all of the company’s retained earnings are to be paid out in dividends on 13/31/11 and that preferred dividends were last paid on 12/31/09, show how much the preferred and common stockholders should receive if the preferred stock is cumulative and fully participating.
(6)
At December 31, 2010, Sager Co. had 1,200,000 shares of common stock outstanding. In addition, Sager had 450,000 shares of preferred stock which were convertible into 750,000 shares of common stock. During 2011, Sager paid $600,000 cash dividends on the common stock and $400,000 cash dividends on the preferred stock. Net income for 2011 was $3,400,000 and the income tax rate was 40%. What would be the diluted earnings per share for 2011 (rounded to the nearest penny)? Please show all computations.
(7)
Presented below are unrelated cases involving investments in equity securities.
Case I. The fair value of the trading securities at the end of last year was 30% below original cost, and this was properly reflected in the accounts. At the end of the current year, the fair value has increased to 20% above cost.
Case II. The fair value of an available-for-sale security has declined to less than forty percent of the original cost. The decline in value is considered to be other than temporary.
Case III. An equity security, whose fair value is now less than cost, is classified as trading but is reclassified as available-for-sale.
Instructions
Indicate the accounting required for each case separately.
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