13-6 Final The stockholders’ equity of TVX at the beginning of the day on February 5...

13-6 Final The stockholders’ equity of TVX at the beginning of the day on February 5 follows:

Com. stock - $10 par value, 150,000 shares authorized, 60,000 shares issued and outstanding $600,000

Paid-in capital in excess of par value, common stock 425,000

Retained earnings 550,000

Total stockholders’ equity $1,575,000

On February 4, the directors declare a 20% dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $40 per share on February 5 before the stock dividend. The stock’s market value is $32.50 per share on February 28. 1. Prepare entries to record both the dividend declaration and its distribution. 2. One stockholder owned 800 shares on February 5 before the dividend. Compute the book value per share and total book value of this shareholder’s shares immediately before and after the stock dividend of February 5. 3. Compute the total market value of the investor’s shares in part 2 as of February 5 and February 28.

14-9 On 1/1/2017 Shay issues $600,000, 10 %, 15-year bonds at 97 3/4. Six years into the life of the bonds, on January 1, 2023, Shay retires 30% of these bonds on the open market at 104 ½. The straight-line method is used to amortize the discount. 1. How much does the company receive when it issues the bonds on 1/1/2017? 2.What is the amount of the discount on the bonds at January 1, 2017? 3. How much of the discount is recorded on the bonds for the entire period from January 1, 2017 through December 31, 2022? 4. What is the carrying value (book value) of the bonds as of the close of business on December 31, 2022? 5. How much did the company pay on January 1, 2023 to purchase the bonds that it retired? 6. What is the amount of gain or loss from retiring the bonds? 7. Prepare the journal entry to record the bond retirement on January 1, 2023.

Solutions

Expert Solution

Date	General Journal	Dr	CR
ans 1	Retained Earnings	$480000
Feb-04	Common stock Dividend Distributable (12000*10)		120000
	Paid in capital in excess of par-Common stock (480000-120000)	360000
	(being stock dividend declared)
	No.of common stock issued
	60000*20%	12000
	Market value 12000*40	480000

Feb-28	Common stock Dividend Distributable (12000*10)	120000
	Common stock		120000

ans 2
		Before	After
	Book value per share	26.25	21.875
		(1575000/60000)	(1575000/72000)
	Total Book value	21000	21000
		(1575000/60000*800)	(1575000/72000(8001.2))

Note after stock dividend also the total shareholder equity remains same
		Feb-05	Feb-28
ans 3	Total market price	32000	31200
		800*40	8001.232.5

Dera student there are two different question I have answered first one.
If any doubt please comment

ekkarill92 answered 1 year ago

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