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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#81771 | Written in 18-Jul-2015

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