ACC 557 Homework 4 Chapters 11 and 12
Due
Week 8 and worth 70 points
E11-7 E11-13 E12-8 E12-12 P11-3A P12-6A
Directions:
Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your
work if a mathematical calculation is needed, or both. Submit your assignment
using the assignment link in Blackboard.
Exercises
E11-7. Quay Co.
had the following transactions during the current period.
Mar. 2 Issued 5,000 shares of $5 par value
common stock to attorneys in payment of a bill for $30,000 for services
performed in helping the company to incorporate.
June
12 Issued 60,000 shares of $5
par value common stock for cash of $375,000.
July
11 Issued 1,000
shares of $100 par value preferred stock for cash at $110 per share.
Nov.
28 Purchased 2,000 shares of
treasury stock for $80,000.
Instructions
Journalize
the transactions.
.
E11-13. On January 1, Guillen 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.
E11-13. On January 1, Guillen 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 25,000 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.
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?
E12-8. Presented below are two independent situations.
1.
Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins
Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins
declared and paid a $60,000 dividend. On December 31, Nevins reported net
income of $122,000 for the year. At December 31, the market price of Nevins
Fashion was $15 per share. The stock is classified as available-for-sale.
2.
Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40%
of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per
share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend
of $30,000. On December 31, Rogan reported a net income of $80,000 for the
year.
Instructions
Prepare
all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b)
Kanza, Inc.
E12-12. Uttinger Company has the following data at December 31, 2015.
Securities
Cost
Fair value
Trading
$120,000 $126,000
Available-for-sale
100,000 96,000
The
available-for-sale securities are held as a long-term investment.
Instructions
a.
Prepare the adjusting entries to report each class of securities at fair value.
b.
Indicate the statement presentation of each class of securities and the related
unrealized gain (loss) accounts.
Problems
P11-3A. The
stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as
follows.
Preferred
Stock (8%, $50 par, cumulative, 10,000 shares authorized) $ 400,000
Common
Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000
Paid-in
Capital in Excess of Par—Preferred Stock 100,000
Paid-in
Capital in Excess of Stated Value—Common Stock 1,450,000
Retained
Earnings 1,816,000
Treasury
Stock (10,000 common shares) 50,000
During
2015, the corporation had the following transactions and events pertaining to
its stockholders’ equity.
Feb.
1 Issued 25,000 shares of
common stock for $120,000.
Apr.
14 Sold 6,000
shares of treasury stock—common for $33,000.
Sept.
3 Issued 5,000
shares of common stock for a patent valued at $35,000.
Nov.
10 Purchased 1,000 shares of
common stock for the treasury at a cost of $6,000.
Dec.
31 Determined that net income
for the year was $452,000.
No
dividends were declared during the year.
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 J5 for the posting reference.)
c.
Prepare a stockholders’ equity section at December 31, 2015, including the
disclosure of the preferred dividends in arrears.
P12-6A. The following data, presented in alphabetical order, are taken from the records of Nieto Corporation.
Accounts
payable $260,000
Accounts
receivable 140,000
Accumulated
depreciation – buildings 180,000
Accumulated
depreciation-equipment 52,000
Allowance
for doubtful accounts 6,000
Bonds
payable(10%, due 2023) 500,000
Buildings 950,000
Cash 62,000
Common
stock($10 par value; 500,000 shares authorized, 15,000 shares issued1,500,000
Dividends
payable 80,000
Equipment
275,000
Fair
value adjustment-available for sale securities(Dr) 8,000
Goodwill
200,000
Income
taxes payable 120,000
Inventory 170,000
Investment
in Mara common stock(30% ownership), at equity 380,000
Investment
in Sasse common stock (10% ownership), at cost 278,000
Land 390,000
Notes
payable(due 2016) 70,000
Paid in capital in excess of par-common stock 130,000
Premium on bonds payable 40,000
Prepaid insurance 16,000
Retained earnings 103,000
Short-term investments, at fair value (and cost)`180,000
Unrealized gain-available-for-sale securities 8,000
The investment in Sasse common stock is considered to be a
long-term available-for-sale security.
Instructions
Prepare
a classified balance sheet at December 31, 2015.
TUTORIAL PREVIEW
Mar. 2 Organization
Expense .................................. 30,000
Common Stock (5,000 X $5) ................. 25,000
Paid-in Capital in Excess of Par
Value—Common Stock ..................... 5,000
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