Complete problems below (4 in total) submit as Excel Worksheet.
Problem #1 — Issuing stock
Bellvue Products Inc., a wholesaler of office products, was organized on January 30 of the current year, with an authorization of 80,000 shares of 2% preferred stock, $75 par and 800,000 shares of $20 par common stock. The following selected transactions were completed during the first year of operations:
Jan. 30. Issued 300,000 shares of common stock at par for cash.
31. Issued 750 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
Feb. 21. Issued 32,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $150,000, $460,000, and $90,000, respectively.
Mar. 2. Issued 15,000 shares of preferred stock at $77.50 for cash. Journalize the transactions.
Journalize the entries to record the transactions.
Problem #2 – Treasury stock transactions
Tom’s Lawn Equipment Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On June 19 of the current year, Tom’s Lawn Equipment Inc. reacquired 24,000 shares of its common stock at $64 per share. On August 30, 19,000 of the reacquired shares were sold at $68 per share, and on September 6, 3,000 of the reacquired shares were sold at $70.
a. Journalize the transactions of June 19, August 30, and September 6.
b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
c. What is the balance in Treasury Stock on December 31 of the current year?
d. How will the balance in Treasury Stock be reported on the balance sheet?
Problem #3 — Entries for selected corporate transactions
Bath ‘n More Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Bath ‘n More Inc., with balances on January 1, 2012, are as follows:
Common Stock, $10 stated value (600,000 shares authorized, 400,000 shares issued) $4,000,000
Paid-In Capital in Excess of Stated Value 750,000
Retained Earnings 9,150,000
Treasury Stock (40,000 shares, at cost) 600,000
The following selected transactions occurred during the year:
Jan. 4. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $46,800.
Apr. 3. Issued 75,000 shares of common stock for $1,200,000.
June 6. Sold all of the treasury stock for $725,000.
July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
Aug. 15. Issued the certificates for the dividend declared on July 1.
Nov. 10. Purchased 25,000 shares of treasury stock for $500,000.
Dec. 27. Declared a $0.16-per-share dividend on common stock.
31. Closed the credit balance of the income summary account, $950,000.
31. Closed the two dividends accounts to Retained Earnings.
1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.
2. Journalize the entries to record the transactions, and post to the eight selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2012.
4. Prepare the Stockholders’ Equity section of the December 31, 2012, balance sheet.
Problem #4 – Stock and Debt Investments
in In January 2011, the management of Acme Company concludes that it has sufficient
cash to permit some short-term investments in debt and stock securities. During the year, the
following transactions occurred.
Feb. 1 Purchased 600 shares of Hershey common stock for $31,800, plus brokerage fees of $600.
Mar. 1 Purchased 800 shares of Praters common stock for $20,000, plus brokerage fees of $400.
Apr. 1 Purchased 50 $1,000, 7% Ralls bonds for $50,000, plus $1,000 brokerage fees. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.60 per share on the Hershey common stock.
Aug. 1 Sold 200 shares of Hershey common stock at $58 per share less brokerage fees of $200.
Sept. 1 Received a $1 per share cash dividend on the Praters common stock.
Oct. 1 Received the semiannual interest on the Ralls bonds.
Oct. 1 Sold the Ralls bonds for $50,000 less $1,000 brokerage fees.
At December 31, the fair value of the Hershey common stock was $55 per share. The fair value of
the Praters common stock was $24 per share.
(a) Journalize the transactions shown on page 599 and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2011, to report the investment securities at fair value. All securities are considered to be trading securities.
(c) Show the balance sheet presentation of investment securities at December 31, 2011.
(d) Identify the income statement accounts and give the statement classification of each account.