Reference no: EM133180655
Questions -
Q1. Rodriguez Corporation issues 19,000 shares of its common stock for $152,000 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.
1. The stock has a $2 par value.
2. The stock has neither par nor stated value.
3. The stock has a $5 stated value.
Q2. Following are the issuances of stock transactions.
1. A corporation issued 4,000 shares of $5 par value common stock for $35,000 cash.
2. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has a $1 per share stated value.
3. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has no stated value.
4. A corporation issued 1,000 shares of $50 par value preferred stock for $60,000 cash.
Prepare journal entries to record each of the following four separate issuances of stock.
Q3. Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Q4. In Draco Corporation's first year of business, the following transactions affected its equity accounts.
1. Issued 4,000 shares of $2 par value common stock for $18. It authorized 20,000 shares.
2. Issued 1,000 shares of 12%, $10 par value preferred stock for $23. It authorized 3,000 shares.
3. Reacquired 200 shares of common stock for $30 each.
4. Retained earnings is impacted by reported net income of $50,000 and cash dividends of $15,000.
Prepare the stockholders' equity section of Draco's balance sheet as of December 31.
Q5. Dunphy Company issued $10,000 of 6%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and December 31.
Prepare the entries for (a) the issuance of the bonds and (b) the first interest payment on June 30.
Q6. On January 1, Renewable Energy issues bonds that have a $20,000 par value, mature in eight years, and pay 12% interest semiannually on June 30 and December 31.
1. Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 103½.
2. How much interest does the company pay (in cash) to its bondholders every six months if the bonds are sold at par?
Q7. Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 ½.
Prepare the journal entry for the issuance of the bonds for cash on January 1.
Q8. Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 ¼. Prepare the journal entry for the issuance of these bonds for cash on January 1.
Q9. On July 1, Aloha Company exercises a call option that requires Aloha to pay $408,000 for its outstanding bonds that have a carrying value of $416,000 and a par value of $400,000. The company exercises the call option after the semiannual interest is paid the day before on June 30. Record the entry to retire the bonds.