[Get Answer ]-Equity And Investments

Question Description

Resources: Ch. 11& 12 of Financial Accounting

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Complete ExercisesE11-15, E12-1, & E12-2.

Complete Problem11-6A.

Submitas a Microsoft® Excel® or Word document.

E11-15OnOctober 31, the stockholders’ equity section of Omar Company consists of commonstock $600,000 and retained earnings $900,000. Omar is considering thefollowing 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. Thecurrent market price is $14 per share.

Instructions

Prepare a tabular summary of theeffects of the alternative actions on the components of stockholders’ equityand outstanding shares. Use the following column headings: Before Action, AfterStock Dividend, and After Stock Split.

BE12-1CoffeyCorporation purchased debt investments for $52,000 on January 1, 2011. On July 1, 2011, Coffey received cashinterest of $2,340. Journalize the purchase and the receipt of interest. Assume that no interest hasbeen accrued.

BE12-2  OnAugust 1,Wade Company buys 1,000 shares of Morgan common stock for $35,000 cash, plus brokerage fees of $700. OnDecember 1,Wade sells the stock investments for $40,000 in cash. Journalize thepurchase and sale of the common stock.

P11-6AArnoldCorporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulativepreferred stock and 2,000,000 shares of no-par common stock. The corporation assigneda $5 stated value to the common stock. At December 31, 2011, the ledgercontained the following balances pertaining to stockholders’ equity.

PreferredStock                                                                        $ 240,000 

Paid-inCapital in Excess of Par Value—Preferred                       56,000

CommonStock                                                                        2,000,000

Paid-inCapital in Excess of Stated Value—Common             5,700,000

TreasuryStock—Common (1,000 shares)                                    22,000

Paid-inCapital from Treasury Stock                                                 3,000

RetainedEarnings                                                                         560,000

The preferred stock was issued for landhaving a fair market value of $296,000.All common stock issued was for cash. InNovember, 1,500 shares of common stock were purchased for the treasury at a pershare cost of $22. In December, 500 shares of treasury stock were sold for $28per share.  No dividends were declared in2011.

Instructions

(a)Prepare the journal entries for the:

            (1) Issuanceof preferred stock for land.

            (2) Issuanceof common stock for cash.

            (3) Purchaseof common treasury stock for cash.

            (4) Saleof treasury stock for cash.

(b)Prepare the stockholders’ equitysection at December 31, 2011.

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