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ACC 291 Week 4 Problems




E11 -15;On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.;Complete the tabular summary of the effects of the alternative actions on the components of stockholders' equity and outstanding shares.;Instructions;Prepare a tabular summary of the effects of the alternative actions on the components of stockholders? equity and outstanding shares. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split.;P 11-16A Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the following balances pertaining to stockholders? equity.;Preferred Stock $ 240,000;Paid-in Capital in Excess of Par Value ? Preferred 56,000;Common Stock 2,000,000;Paid-in Capital in Excess of Stated Value? Common 5,700,000;Treasury Stock? Common (1,000 shares) 22,000;Paid-in Capital from Treasury Stock 3,000;Retained Earnings 560,000;The preferred stock was issued for land having a fair market value of $296,000. All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury at a per share cost of $22. In December, 500 shares of treasury stock were sold for $28 per share. No dividends were declared in 2011.;Instructions;(a) Prepare the journal entries for the;(1) Issuance of preferred stock for land.;(2) Issuance of common stock for cash.;(3) Purchase of common treasury stock for cash.;(4) Sale of treasury stock for cash.;(b) Prepare the stockholders? equity section at December 31, 2011.;E12-1 Max Weinberg is studying for an accounting test and has developed the following questions about investments.;1. What are three reasons why companies purchase investments in debt or stock securities?;2. Why would a corporation have excess cash that it does not need for operations?;3. What is the typical investment when investing cash for short periods of time?;4. What are the typical investments when investing cash to generate earnings?;5. Why would a company invest in securities that provide no current cash flows?;6. What is the typical stock investment when investing cash for strategic reasons?;Instructions;Provide answers for Max.;E12-2 Foren Corporation had the following transactions pertaining to debt investments.;Jan. 1 Purchased 50 8%, $1,000 Choate Co. bonds for $50,000 cash plus brokerage fees of;$900. Interest is payable semiannually on July 1 and January 1.;July 1 Received semiannual interest on Choate Co. bonds.;July 1 Sold 30 Choate Co. bonds for $34,000 less $500 brokerage fees.;Instructions;(a) Journalize the transactions.;(b) Prepare the adjusting entry for the accrual of interest at December 31.


Paper#80022 | Written in 18-Jul-2015

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