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12/31/03 had the following balances in its S.E section of the B.S: Common Stock, $.50 par...

12/31/03 had the following balances in its S.E section of the B.S:


Common Stock, $.50 par $300k

APIC - Common Stock $4 million

APIC - Share Repurchase $50k

R.E $2 million

Treasury Stock, at cost, 30k shares $(600k)

During 2004 completed the follwing transactions

#1)

2/20: Issued40k shares of common stock (with a $.50 par value) in exchange for a machine w/ an appraised value of $800k

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 2/20?

#2)

6/17 : Resold 15k shares of treasury stock for $240k (The treasury stock was resold relates to common stock that was originally issue for $18 per share & was reacquired for $20 per share during 2003.)

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 6/17?

#3)

12/2: Issued 10k shares of common stock for $24 per share. Share issue costs to promote the stock issuance totaled $15k

Required:

Answr the following q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 12/2?

#4)

12/31: Reported NI of $1.5 million and other comprehensve income of $200k on the companys statement of comprehensive income.

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 12/31? *There are 2 journal entries*

Solutions

Expert Solution

1. Journal entry on 2/20 for issue of 40k shares of common stock (with a $.50 par value) in exchange for a machine w/ an appraised value of $800k

Machinery Account                            DR       $800k

Common Stock Account                    CR        $800k

$800k would be reported within its 12/31/04 S.E section of the B.S as increase in shares of common stock

2. The journal entry on 6/17 for reselling 15k shares of treasury stock for $240k (The treasury stock was resold relates to common stock that was originally issue for $18 per share & was reacquired for $20 per share during 2003.

Since the resale price of the treasury stock is $16 per share ($240k/$15k) and the cost price is $20 per share below would be the journal entry

Cash Account                                     DR       $240k

Paid-in capital from treasury stock   DR       $60k

Treasury stock                                                CR        $300k

$300k would be reported within its 12/31/04 S.E section of the B.S as decrease in shares of treasury stock

3. The journal entry on 12/2 for issue of 10k shares of common stock for $24 per share. Share issue costs to promote the stock issuance totaled $15k

Cash Account                                                 DR       $240k (10X24)

Expenses on Issue of Shares Account                       DR       $15k

Common Stock Account (at par value)         CR        $5k (0.5X10)

Security Premium Account                            CR        $235k

Cash Account                                                 CR        $15k

$5k would be reported within its 12/31/04 S.E section of the B.S as increase in shares of common stock and $235k as increase in Security Premium

4. The journal entry on 12/31 for reporting NI of $1.5 million and other comprehensive income of $200k on the company’s statement of comprehensive income

According to accounting standards, other comprehensive income cannot be reported as part of a company's net income and cannot be included in its income statement. Instead, the figures are reported as accumulated other comprehensive income under shareholders' equity.

ekkarill92 answered 1 year ago
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