Cash $91,893Discount$8,107Bonds Payable$100,0003.Record the interest payment on July 1, 2015.Interest Expense $3,676 $91,893 x .04 = $3,676Discount$676Cash$3,0004.Record the interest payment on December 31, 2015.Interest Expense $3,703 ($91,893 + 676) x .04 = $3,703Discount$703Cash$3,0005.Show how the bonds would appear on the December 31, 2015 balance sheet.Bonds Payable $100,000Less: Unamortized Discount(6,728)($8,107 – 676 – 703) = $6,728Carrying Value$93,27210
Stockholders’ EquityYou’ve Made It Corporation presents the following partial balance sheet at December 31, 2015:6% Cumulative, $100 par, preferred stock, 5,000 shares authorized, issued, and outstanding$500,000Additional paid-in capital – preferred 200,000Common stock, $2 par, 100,000 shares authorized, 65,000 shares issued130,000Additional paid-in – common 1,870,000Retained earnings500,000Subtotal$3,200,000Less: Treasury stock (2,000 common shares at cost)( 60,000)Total stockholders’ equity$3,140,000(a) How much was received per share when the common stock was issued?($130,000 + $1,870,000) / 65,000 = $30.77(b) How many shares of common stock are outstanding?65,000 – 2,000 = 63,000(c) What is the current year’s dividend stipulated for the preferred shareholders?6% x $100 x 5,000 = $30,000(d) Assume dividends are in arrears for the two (2) preceding years, 2013 and 2014. How much would have to be paid to preferred shareholders before any dividends are paid to common shareholders?3 years x $30,000 = $90,000(e) What is the cost per share of the treasury stock?$60,000 /2,000 = $30.00 per share(f) Assume that 500 shares of treasury stock are reissued at $33 per share. Record the necessary journal entry.Cash$16,500500 x $33 per shareTreasury Stock$15,000 500 x $30 per sharePIC- Excess$1,500 (to balance)11
Statement of Cash Flows ProblemThe following information is taken from Reyser Corporation's financial statements:December 312015 2014Cash$ 110,000$ 62,000Accounts receivable92,00080,000Allowance for doubtful accounts(4,500)(3,100)Net accounts receivable87,500 76,900Inventory155,000175,000Prepaid expenses7,5006,800Land90,00060,000Buildings287,000244,000Accumulated depreciation(32,000)(13,000)$705,000$611,700Accounts payable$ 90,000$ 84,000Accrued liabilities54,00063,000Bonds payable125,00060,000Common stock100,000100,000Retained earnings351,000312,700Treasury stock, at cost(15,000)(8,000$705,000$611,700For 2015 YearNet income$58,300Depreciation expense19,000Cash dividends declared and paid20,000InstructionsPrepare a statement of cash flows for Reyser Corporation for the year 2015, using theindirect method. No land or buildings were soldduring the year.12
Reyser CorporationStatement of Cash FlowsFor the Year Ended December 31, 2015Increase (Decrease) in CashCash flows from operating activitiesNet income$58,300Adjust to reconcile net income to net cash provided by operating activities:Depreciation expense$19,000Increase in accounts receivable(10,600)Decrease in inventory20,000Increase in prepaid expenses (700)Increase in accounts payable6,000Decrease in accrued liabilities(9,000)24,700Net cash provided by operating activities83,000Cash flows from investing activitiesPurchase of land(30,000)Purchase of buildings(43,000)Net cash used by investing activities(73,000)Cash flows from financing activitiesIssuance of bonds65,000Purchase of treasury stock(7,000)Payment of cash dividends(20,000)Net cash provided by financing activities38,000Net increase in cash$48,000Cash, January 1, 201562,000Cash, December 31, 2015$110,00013
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