Question

1) Presented below is information related to the ABC Company. Prepare the general journal entries necessary to record these transactions. If no entry is needed, write “No Entry”

a. The company received state authorization to issue 15,000 shares of $100 par value preferred stock and 40,000 shares of $5 par value common stock.

b. 12,000 shares of common stock are sold to the general public for $15 per share.

c. 8,000 shares of preferred stock are sold for cash at $120 per share.

d. 7,500 shares of common stock are issued to the founders of the corporation for land. The land was valued by the board of directors at $375,000.

e. 4,000 shares of common stock was issued for equipment. The fair value of the stock at the time was $22 per share.

f. A dividend of $45,000 is declared to the common stockholders. Preferred shareholders had already received dividends.

g. The dividend declared above was paid to the common stockholders.

h. 10% common stock dividend was announced. The market price of the stock on that day was $15

2) Hansen Corporation's balance sheet reported the following:

Common stock issued and outstanding - 10,000 shares $80,000

Paid-in capital in excess of par – common stock 120,000

Retained earnings 300,000

Prepare the journal entry for the following transactions that occurred this year:

(a) Purchased 200 shares of capital stock to be held as treasury stock, paying $75 per share.

(b) Sold 80 of the shares of treasury stock at $80 per share.

(c) Sold 70 shares of treasury stock at $65 per share.

(d) Retired the remaining shares

3) Sun, Inc., has 2,500 shares of 8% $100 par value cumulative preferred stock authorized, 1,500 shares issued and 1,000 shares outstanding. It also has 200,000 shares of $10 par value common stock issued and 120,000 shares issued and outstanding. No dividends have been declared or paid during 2010, 2011or 2012. As of December 31, 2013, it declared $200,000 in dividends. How much dividends will the preferred and common stockholders receive in each of the following years: 2010, 2011 2012 2013

4) The December 31, 2012 balance sheet of Wolfe Co. included the following items:

7.5% convertible bonds payable due December 31, 2020 $2,000,000

Unamortized Premium on bonds payable 100,000

The bonds were issued on December 31, 2010 at 104, with interest payable every June 30 and December 31. Each $1,000 bond is convertible to 20 shares of $5 par value common stock. The stocks had a market price of $25 per share.

On January 1, 2013, after recording the December interest, Wolfe:

retired half of the bonds at 98 and

converted the other half of the bonds to common stocks.

Instructions

Prepare the journal entry for these transactions

Answer 1

Sr no.	Particulars	Debit $	Credit $
a	No entry
b	Cash	$      180,000
	Common stock		$        60,000
	APIC- Common Stock		$      120,000
c	Cash	$      960,000
	Preferred stock		$      800,000
	APIC - Preferred stock		$      160,000
d	Land	$      375,000
	Common stock		$        37,500
	APIC- Common Stock		$      337,500
e	Equipment	$         88,000
	Common stock		$        20,000
	APIC- Common Stock		$        68,000
f	Retained earnings	$         45,000
	Dividend payable		$        45,000
g	Dividend payable	$         45,000
	Cash		$        45,000
h	Retained earnings	$         35,250
	Common stock		$        11,750
	APIC- Common Stock		$        23,500

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