3bm1w09v2 - Answer Key 1 D True C True True D False C B 10 B 11 False)OPGQQU‘APJN 12 True 13 D 14 True 15 C 16 D 17 False 18 False q 3 Version 2

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Unformatted text preview: Answer Key 1. D . True C . True . True D . False C B 10. B 11. False )OPGQQU‘APJN 12.. True 13 D 14 True 15 C 16. D 17 False 18 False q 3 Version 2 Problem 1 a. On May 10 McLain Corporation issues 2,810 shares of$5 par value on stock for cash at $13 per share. Journaiize the issuance of the stock. (For multiple debit/credit entries, list accounts in order of magnitude.) ABEiI-Z : k A: n 1 sari mm ,, , ,V ,, Cried-it May 102' Cash 3536.530 _ E 22* Paid-in capital in excess of par value S 22.480f _,,,__,_§0!nrn<>n,5i9ck___, _ ,, _ _ _ , r , ,, _ _ . , _ _ _,,,,$,,”,-F’50f ’ b. On June 1 Harmon Inc. issues 1020 shares of no-par common stock at a cash price of$6 per share. Journalize the issuance ofthe shares. ABEI 1-3 m Accoiintig Descripgian '_ [I Debit A L H Q‘Cred’its June I [Cash H , $098 c. Duggen Inc. issues 4,990 shares of$95 par value preferred stock for cash at $125 per share. Journaiize the issuance ofthe shares. (For multiple debit/credit entries, list accounts in order of magnitude.) ABE11‘4 “mm-[Plemf‘m , , , , mw,,,,,,_, and“, (gash _ I I _ Sh23.750 : Preferredswck _ . , A x, r , , , 34-4,?4J’fi0; ,,,,_,__,,,Pridriiicaniwliamsssvi'mrvalue-Prrfbrrfid stock , , ~ , , ,_ , “9-100: 4 Version 2 Problem 2 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, l0,000 shares authorized, 6,000 shares issued and outstanding $600,000 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 paid—in 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 of] 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 $36,000, what is the dividend rate on preferred stock? If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings? 9909's» EXERCISE 11-4 Solution f” (a) Common stock outstanding is 592,000 shares. (Issued shares 600,000 less treasury shares :9 8,000.) 6/ (b) The stated value of the common stock is $3.50 per share. (Common stock issued $2,100,000 + 600,000 shares.) 312$wa rgg‘fédt 6/ (c) The par value of the preferred stock is $100 per share. (Preferred stock $600,000 —1- 6,000 shares.) 535! (d) The dividend rate is 6% ($36,000 —-:- $600,000). ZJ/ (e) The Retained Earnings balance is still $1,158,000. Cumulative dividends in arrears are only disclosed in the notes to the financial statements. 5 Version 2 Problem 3 On January 1, 2007, KC Corporation had these stockholders' equity accounts. Common Stock ($10 par value, 58,100 shares issued and outstanding) $581,000 Paid—in Capital in Excess of Par Value 503.700 Retained Earnings 618,800 During the year, the following transactions occurred. Jan. 15 Declared a $0.53 cash dividend per share to stockholders of record on January 3 1, payable February 15. Feb. 15 Paid the dividend declared in January. Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30. distributable May 15. On April 15 the market price ofthe stock was $15 per share. May 15 Issued the shares for the stock dividend. Dec. 1 Declared a $0.52 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: AP11-8A v2 ,, _, ,, ,, g payable ,. ,, ,, 3 \l: " * ,_ - 92.13.11.” , 0‘ ,_ St991é_,__divid¢nds distributable , (528,10 X$10> ‘ ._. _Pa.id:ie9apital. (5:810 >335), (53,10 , V i i ; ,..,99mm0nst9?k - 1' E M i f f ' ,f ,,,.,-,.J?,iri9¢e€ls,Payable-_ . ' 6 Version 2 Problem 4 KC Company uses the periodic inventory method and had the following inventory information avaiiabie: Units Unit Cost Totai Cost 1/1 Beginning inventory 100 $3 $ 300 1/20 Purchase g 500 $4 2,000 7/25 Purchase 100 $5 500 10/20 Purchase 300 $6 1,800 LQQQ seem A physicai count of inventory on December 31 reveaied that there were 375 units on hand. Instructions Answer the foiiowing 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 UFO method. The vaiue of the ending inventory on December 31 is? 4 Determine the difference in the amount of income that the company wouid have reported if it had used the FiFO method instead ofthe UFO method. Wouid income have been greater or iess? _, ' x Solution 188 (20 min.) “it 3 z 1. FIFO: Ending inventory $2,175 a 300 units @$6 $1,800 H il 75 units @fi5 375 35.00115 324.151 2, Average Cost: Ending inventory $1,725 $4,600 + 1,000 = $450 per unit x 375 units = g; g; g" 3. LIFO: Ending inventory $1,400 100 units @$3 $5 300 a” 275 units @§4 1 100 5” Blimfls MADE 4. FiFO: Cost of goods soid $2,425 “\ 100 units @$3 = $ 300 500 units @$4 = 2,000 N = 125 6250005 ELLE; LiFO: Cost of goods soid $3,200 {7 300 units @$6 $1,800 100 units @355 500 225 units @§4 900 0254an $1200 income would have been $775; ($3,200 vs $2,425) greater if the company used FIFO instead of LIFO/ 7 Version 2 Problem 5 The following information was available from the inventory records of KC Company for January: Units Unit Cost Total Cost Balance at January ] 3,000 $9.77 $29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.7] 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. FIFO: Transactions: Inventory Balance: Date Units La er 1 La er 2 La er 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 - 3,200 Cost _ 9.77 10.30 10.71 1,200 24,425.00 5‘} - 7,497.00 " - 31,922.00 ' Calculation of Cost of Goods Sold: Dollars Units Beg. inventory 29,310.00 3,000 Purchases 49,517.00 4,700 Goods available 7,700 78,827.00 Ending inventory COGS Version 2 ...
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This note was uploaded on 06/18/2009 for the course ECON ECON 3B taught by Professor Harmon during the Spring '08 term at UCSB.

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3bm1w09v2 - Answer Key 1 D True C True True D False C B 10 B 11 False)OPGQQU‘APJN 12 True 13 D 14 True 15 C 16 D 17 False 18 False q 3 Version 2

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