Wilco Corporation has the following account balances at December 31, 2012.
Common stock, $5 par value
$555,600
Treasury stock
90,720
Retained earnings
2,426,200
Paid-in capital in excess of par—common stock
1,321,900
Prepare Wilco’s December 31, 2012, stockholders’ equity section. (For preferred stock, common
stock and treasury stock enter the account name only and do not provide the descriptive
information provided in the question.)
WILCO CORPORATION
Stockholders’ Equity
December 31, 2012
$
:
$
Sprinkle Inc. has outstanding 10,050 shares of $10 par value common stock. On July 1, 2012,
Sprinkle reacquired 107 shares at $89 per share. On September 1, Sprinkle reissued 61 shares at
$90 per share. On November 1, Sprinkle reissued 46 shares at $85 per share.
Prepare Sprinkle’s journal entries to record these transactions using the cost method. (If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts. Credit
account titles are automatically indented when amount is entered. Do not indent manually.)
Date
7/1/12
9/1/12
11/1/12
Account Titles and Explanation
Debit
Credit
Graves Mining Company declared, on April 20, a dividend of $519,800, on its $5 par common
stock, payable on June 1. Of this amount, $133,700 is a return of capital.
Prepare the April 20 and June 1 entries for Graves. (If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts. Credit account titles are automatically
indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Apr. 20
June 1
Abernathy Corporation was organized on January 1, 2012. It is authorized to issue 10,290 shares of
8%, $65 par value preferred stock, and 544,000 shares of no-par common stock with a stated value
of $2 per share. The following stock transactions were completed during the first year.
Jan.
10
Issued 80,330 shares of common stock for cash at $6 per share.
Mar. 1
Issued 5,670 shares of preferred stock for cash at $113 per share.
Apr. 1
Issued 24,730 shares of common stock for land. The asking price of the land was $90,540;
the fair value of the land was $80,330.
May 1
Issued 80,330 shares of common stock for cash at $9 per share.
Aug. 1
Issued 10,290 shares of common stock to attorneys in payment of their bill of $50,620 for
services rendered in helping the company organize.
Sept.
1
Issued 10,290 shares of common stock for cash at $11 per share.
Nov. 1
Issued 1,940 shares of preferred stock for cash at $115 per share.
Prepare the journal entries to record the above transactions. (If no entry is required, select "No
Entry" for the account titles and enter 0 for the amounts. Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
Date
Jan.
10
Mar. 1
Account
Titles and
Explanation
Debit
Credit
April 1
May 1
Aug. 1
Sept.
1
Nov. 1
Jan. 10
Cash (80,330 x $6) = $481,980
Common Stock (80,330 x $2) = $160,660
Paid-in Capital in Excess of Stated Value—Common Stock (80,330 x
$4) = $321,320
Mar. 1
Cash (5,670 x $113) = $640,710
Preferred Stock (5,670 x $65) = $368,550
Paid-in Capital in Excess of Par—Preferred Stock (5,670 x $48) = $272,160
April 1
Common Stock (24,730 x $2) = $49,460
Paid-in Capital in Excess of Stated Value—Common Stock ($80,330 –
$49,460) = $30,870
May 1
Cash (80,330 x $9) = $722,970
Common Stock (80,330 x $2) = $160,660
Paid-in Capital in Excess of Stated Value—Common Stock (80,330 x
$7) = $562,310
Aug. 1
Common Stock (10,290 x $2) = $20,580
Paid-in Capital in Excess of Stated Value—Common Stock ($50,620 –
$20,580) = $30,040
Sept. 1
Cash (10,290 x $11) = $113,190
Common Stock (10,290 x $2) = $20,580
Paid-in Capital in Excess of Stated Value—Common Stock (10,290 x
$9) = $92,610
Nov. 1
Cash (1,940 x $115) = $223,100
Preferred Stock (1,940 x $65) = $126,100
Paid-in Capital in Excess of Par Value—Preferred Stock (1,940 x $50) = $97,000
Sanborn Company has outstanding 40,000 shares of $5 par common stock which had been issued at
$30 per share. Sanborn then entered into the following transactions.
1.
Purchased 5,000 treasury shares at $45 per share.
2.
Resold 500 of the treasury shares at $40 per share.
3.
Resold 2,000 of the treasury shares at $49 per share.
Indicate the effect each of the three transactions has on the financial statement categories listed in
the table below, assuming Sanborn Company uses the cost method.
#
Assets
Liabilities
Stockholders’
Equity
Paid-in
Capital
Retained
Earnings
Net
Income
1.
2.
3.
The following information has been taken from the ledger accounts of Sampras Corporation.
Total income since incorporation
$327,200
Total cash dividends paid
75,500
Total value of stock dividends distributed
54,100
Gains on treasury stock transactions
18,530
Unamortized discount on bonds payable
32,410
Determine the current balance of retained earnings.
Current balance of retained earnings $
The following is a summary of all relevant transactions of Vicario Corporation since it was organized in
2012.
In 2012, 15,610 shares were authorized and 7,860 shares of common stock ($59 par value) were
issued at a price of $65. In 2013, 1,020 shares were issued as a stock dividend when the stock was
selling for $69. 350 shares of common stock were bought in 2014 at a cost of $75 per share.
These 350 shares are still in the company treasury.
In 2013, 12,000 preferred shares were authorized and the company issued 5,090 of them ($100 par
value) at $112. Some of the preferred stock was reacquired by the company and later reissued for
$4,660 more than it cost the company.
The corporation has earned a total of $611,100 in net income after income taxes and paid out a total
of $329,200 in cash dividends since incorporation.
Prepare the stockholders’ equity section of the balance sheet in proper form for Vicario Corporation as
of December 31, 2014. Account for treasury stock using the cost method. (For preferred stock,
common stock and treasury stock enter the account name only and do not provide the
descriptive information provided in the question.)
VICARIO CORPORATION
Stockholders’ Equity
December 31, 2014
$
$
:
$
Linden Corporation is preparing its December 31, 2012, financial statements. Two events that
occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are
described below.
1. A liability, estimated at $160,000 at December 31, 2012, was settled on February 26, 2013, at
$170,000.
2. A flood loss of $80,000 occurred on March 1, 2013.
What effect do these subsequent events have on 2012 net income? (If there is no impact select
not change and 0 for the amount.)
Net income will
Net income will
by $
by $
as a result of the adjustment of the liability.
as a result of the adjustment of the flood loss.
Keystone Corporation issued its financial statements for the year ended December 31, 2012, on March
10, 2013. The following events took place early in 2013.
(a) On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share.
(b) On March 1, Keystone determined after negotiations with the Internal Revenue Service that
income taxes payable for 2012 should be $1,320,000. At December 31, 2012, income taxes
payable were recorded at $1,100,000.
Discuss how the preceding post-balance-sheet events should be reflected in the 2012 financial
statements.
For each of the following subsequent (post-balance-sheet) events, indicate whether a company should
(a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither
adjust nor disclose.
Sr.
No.
1.
2.
3.
4.
5.
6.
Subsequent (Post-Balance-Sheet)
Events
Settlement of federal tax case at a cost
considerably in excess of the amount
expected at year-end.
Introduction of a new product line.
Loss of assembly plant due to fire.
Sale of a significant portion of the
company’s assets.
Retirement of the company president.
Issuance of a significant number of shares
of common stock.
7.
8.
9.
10.
Loss of a significant customer.
Prolonged employee strike.
Material loss on a year-end receivable
because of a customer’s bankruptcy.
Hiring of a new president.
11.
Settlement of prior year’s litigation
against the company.
12.
Merger with another company of
comparable size.