3bm1w09v1 - 3B Midterm 1 W09 finswer Key epomummbwm ’1 m...

Unformatted text preview: 3B Midterm 1 W09 finswer Key epomummbwm ’1': m ._ Cl} (9 Mpg-.4 12. False 13. False 14. D 15. True 16. B 17. True 18. A 4 Version 1 Problem 1 VI a. On May 10 McLain Corporation issues 3,480 shares of$5 par value common stock for cash at $14 per share. J ournalize the issuance of the stock (F or multiple debit/credit entries, list accounts in order of magnitude.) ABEl 1—2 b. On June 1 Harmon Inc. issues 2,300 shares of no-par common stock at a cash price of $8 per share. Journalize the issuance of the shares. ABEl 1-3 c. Duggen Inc. issues 4,750 shares of $89 par value preferred stock for cash at $1 13 per share. Journalize the issuance of the shares. (For multiple debit/credit entries, list accounts in order of magnitude.) ABE] l-4 5 Version 1 Problem v1 The stockholders’ equity section of KC Corporation’s balance sheet at December 31 is presented here. KC CORPORATION Balance Sheet (partial) Stockholder's equity Paid—in capital Preferred stock, cumulative, 10,000 shares authorized, 6,000 shares issued and outstanding $600000 Common stock. no par, 750,000 shares authorized, 600,000 shares issued 2,100,000 Total paid—in capital 2,700,000 Retained earnings 1,158,000 Total paidain capital and retained earnings 3,858,000 Less: Treasury stock (8,000 common shares) {32,000} Total stockholder‘s equity $3,826,000 From a review of the stockholders’ equity section, answer the following questions. (Round all answers to 0 decimal places.) How many shares of common stock are outstanding? Assuming there is a stated value, what is the stated value ofthe common stock? What is the par value of the preferred stock? lfthe annual dividend on preferred stock is $36000, what is the dividend rate on preferred stock? 99-99792 earnings? ,1" 2/5; / s EXERCISE 11—4 Solution 4:: r" M” /” ”M3 If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained / (a) Common stock outstandiniis 592,000 sliares. (Issued shares 600,000 less treasury 5 shares 8,000.) M W / (b) The stated value of the common stock {Q Signer share. (Common stock issued f2 $2,100,000 + 600,000 shares.) ‘36be W s q“ / (c) The par value of the preferred stock is $100 per share. (Preferred stock $600,000 + {5 6,000 shares.) {’4 (d) The dividend rate is 6% ($36,000 + $600,000). 4/ (e) The Retained Earnings balance is still $1,158,000. Cumulative dividends in arrears are only disclosed in the notes to the financial statements. Version 1 Problem v1 On January 1, 2007, KC Corporation had these stockholders’ equity accounts. Common Stock ($10 par value, 59,800 shares issued and outstanding) $598,000 Paid~in Capital in Excess of Far Value 491 ,900 Retained Earnings 618,000 During the year, the following transactions occurred. Jan. 15 Declared a $052 cash dividend per share to stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Apr. 15 Declared a 10% stock dividend to stockholders ofrecord on April 30, distributable May 15. On April 15 the market price of the stock was $12 per share. May 15 Issued the shares for the stock dividend. Dec. 1 Declared a $0.69 per share dividend to stockholders of record on December 15, payable January 10. 2008. Prepare the journal entry for each of the transactions above. Be sure and date each journal entry. (Round all answers to 0 decimal places.) Answer: API I-SA v1 53“” Rammed earmngsl” 300X5O 5,2) , ,; , 314096, ,,,__,,,,,.,,: ; ,DlVldendS P333191 , _ _ _ _: _ 31096 3 i A DIVIdendspayable ' ,, , 31096 5” Apr15 Retained earnings (5 980x$12) I L I, 5 5 i, 5 _’ 71,7560; _ __ , ., ,3 Common stock dividends distributable ((5 980 x $10) _ f , , g _ , , 59,800 Paid Incapltalt<3980><$°> _ “960 ,. ommon stock d1v1dends dlstributable ((5 980 x 810) Common stock Dlegaa ; i 44344 , § D1v1dends payable , , g __ 459388 7 Version 1 Ex. 187 Problem v1 KC Company uses the periodic inventory method and had the following inventory information available: Units Unit Cost Total Cost 1/1 Beginning Inventory 100 $4 $ 400 1/20 Purchase 500 $5 2,500 7/25 Purchase 100 $7 700 10/20 Purchase 300 $8 2,400 1909 $9999 A physical count of inventory on December 31 revealed that there were 325 units on hand. Instructions Answer the following independent questions and show computations supporting your answers. 1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is? 2 Assume that the company uses the average cost method. The value of the ending inventory on December 31 is? 3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is? 4 Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead ofthe LlFO method. Would income have been greater or less? Sqution 187 (20 min.) 1. FIFO: Ending inventory $2,575 300 units @$8 = $2,400 s: 25 units @s7 = 175 5 325% $2,525 {M 2. Average Cost: Ending inventory $1,950 $6,000 + 1,000 = $0.00 per unit x 325 units = M { 3. LIFO: Ending Inventory $1,525 100 units @$4 - s 400 5/ 225 units @s5 = 1 125 g” m M A?” / 4. FIFO: Cost of goods sold $3,425 \ 5' 100 units @554 = $ 400 \ 500 units @$5 = 2,500 E 75 units @§7 = 525 ' x, 525411105 53.2425 (.2: LIFO: Cost of goods sold $4,475 a...» 300 units @$8 $2,400 3 g "\ 100 units @$7 700 " 275 units @55 1,375 , $159015 $302125 {X Income would have beén $1,050; ( 4,475 vs. $3,425) greater if the company used FIFO instead of Lle t. M 7‘ NJ 8 Version 1 Problem 5 The following information was available from the inventory records of KC Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 $9.77 $29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2.700 10.71 28,917 Sales: January 7 (2,500) January 31 12,000) Balance at January 31 3 200 Calculate ending inventory and cost of goods sold assuming KC uses the perpetual inventory system applying the LIFO cost flow assumption. FlFO: Transactions: Inventory Balance: Date Units Layer 1 La er 2 Layer 3 Layer 4 Total Jan. 1 3,000 3,000 Jan. 6 2,000 2,000 Jan. 7 (2,500) (500) (2,000) Jan. 26 2,700 2,700 Jan. 31 (4,000) (2,000) 2,500 - 700 — / {yifltagoo Cost 9.77 , 10.30 10.71 ,, a, 05' 7‘ ”WWW/X 1,200 24,425.00 " 'E 7,497.00 5.. 31,922.00 j Calculation of Cost of Goods Sold: ' ' Dollars Unts Beg. inventory . 29,310.00 3,000 Purchases ' 49,517.00 4,700 Goods available 7 , g 78,827.00 7,700 Ending inventory , 4;; 1,922 1,200 COGS ' 46, 05.00 6,500 i I .... ...
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