Journalize the selected transactions for the fiscal year ending December 31,2012
ID: 2500037 • Letter: J
Question
Journalize the selected transactions for the fiscal year ending December 31,2012
a. Issued 12500 shares of $25 par common stock at $32, recieving cash.
b. Issued 2000 shares of $100 par preferred 5% stock at $105, recieving cash
c.) Issued $400,000 of 10 year, 6% bonds at 105, with interest payable semiannually
d.) Declared a quarterly dividend of $.45/share on common stock and $1.25 per share on preferred stock. On date of record, 85,000 shares of common stock were outstanding, no treasury shares were held, and 17,000 shares of preferred stock were outstanding.
e.) paid the cash dividends declared in (D)
f.) purchased 5,500 shares of Kress Corp. at $22/share, plus $275 brokerage commission. The invesstment is classified as an available for sale investment
g.) purchased 6500 shares of treasury common stock at $35/share
h.) purchased 36000 shares of lifecare co. stock directly from the founders for $18/share. Lifecare hass 112,500 shares issued and outstanding. The investmetn is being treated as an equity method investment.
I.) Declared 2% stock dividend on common stock and a $1.25 quarterly dividend per share on prederred stock. On the date of declaration the market value of the common stock was $40/share. On the date of record 85000 shares of common stock had been issued, 6500 were shares of treasury common stock held, and 17000 shares of preferred stock had been issued.
J.) Issued the stock certificates for the stock dividends declared in (H) and paid cash dividends to preferred share holders.
K.) Recieved $24500 dividend from Lifecare Co. investment in (H)
L.) Purchased $62000 of Nordic Wear Inc 10 year 6% bonds, directly from the issuing company at par value, plus accured interest of $550. The bonds are classified as a held to maturity long term investment.
M.) Sold at $42/share 2600 shares of treasury common stock purchased in (G)
N.) Recieved a dividend of .65/share from the Kress Corp investment in (F)
O.) Sold 500 shares of Kress Corp at $26.50, including commission.
P.) Recorded the payment of semiannual interest on the bonds issued in (C) and the amortization of the premium for six months. The amortization was determined using the straight line method.
Q.) Accured interest for 3 months on the Nordic Wear Inc. bond purchase in (L)
R.) Lifecare Co. recorded total earnings of $205,000. Everyday products recorded equity earnings for its share of lifecare co. net income.
S.) The fair value for Kress Corp. stock was $18.50 per share on December 31,2012. The investment is adjusted to fair value using a valuation allowance account. Assume Valuation Allowance for available-for-sale investments had a beggining balance of zero.
Explanation / Answer
Journal Entries
a. Debit Bank A/c $ 4,00,000
Credit Share Capital A/c $ 4,00,000
Credit Securities Premium $ 87,500
b. Debit Bank a/c $ 2,10,000
Credit prefered Share Capital $ 2,00,000
Credit Securities Premium $ 10,000
c. Debti Bank a/c $ 4,20,000
Credit 6% Bonds a/c $ 4,00,000
Credit Securities premium a/c $ 20,000
d. Debit Dividend on Stock a/c $ 38,250
Debit Dividend on Prefered stock a/c $ 21,250
Credit Common share holders a/c $ 38,250
Credit Prefereed share holders a/c $ 21,250
e. Debit Common shareholders a/c $ 38,250
Debit Preferred shareholders a/c $ 21,250
Credit Bank a/c $ 59,500
f. Debit Shares in Kress Corp. a/c $ 1,21,000
Debit Brokerage commission a/c $ 275
Credit Bank a/c $ 1,21,275
g. Debit Treasury common stock a/c $ 2,27,500
Creit Bank a/c $ 2,27,500
h. Debit Shares in Life care co. a/c $ 6,48,000
Credit Bank a/c $ 6,48,000
i. Debit Dividend on common stock a/c $ 42,500
Debit Dividend on preferred stock a/c $ 21,250
j. Debit preferred shareholders a/c $ 21,250
Credit bank a/c $ 21,250
k. Debit Bank a/c $ 24,500
Credit Dividend from Life Care co. a/c $ 24,500
l. Debit 6% Bonds from Nordic Wear inc.a/c $ 62,000
Debit Accrued Interest a/c $ 550
Credit Bank a/c $ 62,550
m. Debit Bank a/c $ 1,09,200
Credit Common stock a/c $ 91,000
Credit Profit and Loss a/c $ 18,200
n. Debit Bank a/c $ 3,575
Credit Dividend from Kress Corp $ 3,575
o. Debit Bank a/c $ 13,250
Credit Shares in Kress Corp $ 13,250
p. Debit Interest on 6% Bonds a/c $ 12,000
Credit Bank a/c $ 12,000
Debit Profit and Loss a/c $ 1,000
Credit Securiteis premium on Bonds $ 1,000
Q. Debit Interest on Nordic Wear Inc. Bond a/c $ 930
Credit Accrued Interest a/c $ 930
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