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Accounting 3230 Exercises #4 Spring 2014

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Question;Accounting 3230Exercises #4Spring 2014Part 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#41802 | Written in 18-Jul-2015

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