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Accounting 3230_ Exercises #4_ Spring 2014

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Question;Accounting 3230;Exercises;#4;Spring 2014;Part 1;Blue Sapphire Inc. issues 2,500 shares of $1 par value common stock;and 1,000 shares of $50 par value;preferred stock for a lump sum of $275,000.;Instructions;a);Prepare the journal entry for;the issuance when the market value of the common shares is $95 each and the;market value of the preferred is $60 each.;b);Prepare the journal entry for;the issuance when only the market value of the common stock is known and it is;$90 per share.;Part 2;The outstanding capital stock of Jersey Brands Corporation consists;of 10,000 shares of $75 par value, 10% preferred and 25,000 shares of $1 par;value common.;Instructions;Assuming that the company has net income of $250,000, all of which;is to be paid out in dividends, and that preferred dividends were not paid;during the current year r or the past year, state how much each class of stock;should receive under each of the following conditions.;a);The preferred stock is noncumulative;and fully participating.;b);The preferred stock is cumulative and;nonparticipating.;c);The preferred stock is;cumulative and fully participating.;Part 3;On January 1, 20X2, Archie Game Corporation issued 15 year;$50,000,000 face value 4% bonds at par. Each $1,000 bond is convertible into 20;shares of Archie Game Corporation common stock. None of the bonds were;converted in 20X2. Archie Game Corporation's net income in 20X2 was $8,680,00;and its tax rate was 30%. The company had 2,650,000 shares of common stock;issued and outstanding throughout 20X2.;Instructions;a);Compute diluted earnings per;share for 20X2.;b);Compute diluted earnings per;share for 20X2 assuming the same facts as above, except that $50,000,000 of 6%;convertible preferred stock was issued instead of the bonds. Each $1000;preferred share is convertible into 2 shares of Archie Game Corporation common;stock.

 

Paper#37422 | Written in 18-Jul-2015

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