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Mizzou ACCTCY 2037 - Chapter 23 Homework

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23-22On January 10, 2011, Ryland Carpet Corporation is incorporated and is authorized to issue 20,000 shares of $7 par value common stock. On January 12, 2011, it issues 1,000 shares at $12 per share, and on July 5, 2011, it issues another 800 shares at $15 per share.Required:1. Record the two issuances of common stock for Ryland.2. Prepare the contributed capital section of Ryland’s December 31, 2011 balance sheet.1.Assets = Liabilities+ Stockholders’ EquityContributed CapitalCash CommonStockAdditionalPaid-inCapital1/12$12,000$7,000 $5,0007/0512,000 5,600 6,4002. 2011 Balance SheetContributed capitalCommon stock, $7 par value, 20,000 authorized, 1,800 issued and outstanding…………………………………$12,600Additional paid-in capital……………………………………….. 11,400Total contributed capital…………………………………………………$24,00023-24Antley Company issued 200 shares of $10 par value common stock in exchange for five acres of land.Required: Record the acquisition of the land for each of the following independent situations:a. The common stock is currently selling on the stock market for $80 per shareb. The land is appraised at $15,000, but the stock is not actively traded in the stock market.a.Assets = Liabilities+ Stockholders’ EquityContributed CapitalLand CommonStockAdditional Paid-InCapital$16,000$2,000 $14,000b.Assets = Liabilities+ Stockholders’ EquityContributed CapitalLand CommonStockAdditional Paid-InCapital$15,000$2,000 $13,00023-28On January 1, Amitroy Company had 20,000 shares of $5 par value common stock outstanding. The shares were originally issued at $12 per share. During the year, the following stock transactions occurred:March 4: The company reacquired 2,000 shares of its common stock at a cost of $12 per share.April 5: The company sold 1,000 shares of the treasury stock for $14 per share.July 9: The company sold the remaining 1,000 shares of the treasury stock for $11 per share.Required: 1. Record all the preceding transactions in one set of accounts for Amitroy.2. What is the final net effect on the accounts after these transactions are recorded? Why?1.Assets = Liabilities+ Stockholders’ EquityContributed CapitalCash Additional Paid-inCapital- Treasury Stock3/04$(24,000)- $24,0004/0514,000 $2,000 - (12,000)7/0911,000 (1,000) (12,000)2. After these transactions are recorded, the net effect is that both cash and additional paid-in capital have increased by $1,000 because the company sold the 1,000 shares of treasury stock for $1,000 more that it paid for them.23-34The records of the Lundgren Chemical Corporation show the following pretax items on December 31, 2011: Cost of goods sold $65,000Extraordinary loss from flood 2,250General and administrative expenses 12,000Interest revenue 700Interest expense 300Loss on sale of discontinued component Q 250Income from operations of discontinued componentQ800Selling expenses 23,000Sales 129,400Additional Information:a. There were 3,000 shares of common stock outstanding on January 1, 2011. Only July 1, 2011, the corporation issued 6,000 common shares.b. The corporation paid dividends for the current year on 500 shares of 7%, $100 par preferred stock outstanding. Dividends of $6,000 were paid on common stock.c. The corporation is subject to a 40% income tax.Required: Prepare the income Statement of Lundgren Chemicals Corporation for 2011.Lundgren Chemicals CorporationIncome StatementFor Year Ended, December 31, 2011Sales $ 129,400Cost of goods sold (65,000) Gross Profit $ 64,400 Operating expenses Selling expenses $ 23,000 General and administrative expenses 12,000 Total operating expenses (35,000)Operating income $ 29,400Other items Interest revenue $700 Interest expense (300) Nonoperating income 400Pretax income from continuing operations $ 29,800Income tax expense of continuing operations (11,920)Income from continuing operations $ 17,880Income from operations of discontinuing component Q (net of $320 income tax expense)$480Loss on sale of discontinued component Q (net of $100 income tax credit)(150) 330Extraordinary loss from flood (net of $900 income tax credit(1,350)Net Income $ 16,860Continue onto next page….Basic earnings per common share (see Note A)Income from continuing operations $2.40Results from discontinued operations 0.06Extraordinary loss from flood (0.23)Basic earnings per common share $2.23Note A: Preferred dividends of $3,500 ($100 x .07 x 500) were deducted from net income and income from continuing operations in computing earnings per share. The weighted average number of common shares outstanding is 6,000 shares [(3,000 x 12/12) + (6,000 x 6/12)].23-39During 2011, Herley Transport Corporation entered into the following long-term debt and capital stock transactions:a. Issued 5,000 shares of common stock for $18 per share.b. Issued 1,000 shares of preferred stock for $110 per share.c. Reacquired 1,000 shares of common stock for $19 per share.d. Issued long-term bonds for $100,000.e. Paid interest of $10,000 on long-term bonds.f. Paid dividends of $16,000 on preferred stock.g. Paid dividends of $34,000 on common stock.Required: Show how Herley would report the preceding transactions on its 2011 cash flow statement (assuming it uses the direct method for reporting cash flows from operating activities.)Cash flows from Operating Activities (partial) Cash Outflows: Payment of interest $10,000Cash flows from Financing Activities Cash Inflows: Receipt from issuance of common stock $90,000 Receipt from issuance of preferred stock 110,000 Receipt from issuance of long-term bonds 100,000 Cash Outflows: Payment to acquire treasury stock (19,000) Payment of dividends on preferred stock (16,000) Payment of dividends on common stock


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