On October 1, 2011, $2,500,000 of these bonds were converted into 35,000 shares of $15 par common stock. Accrued interest was paid in cash at the time of conversion.
(a) Prepare the entry to record the interest expense at April 1, 2011. Assume that interest payable was credited when the bonds were issued (round to nearest dollar).
(b) Prepare the entry to record the conversion on October 1, 2011. Assume that the entry to record amortization of the bond premium and interest payment has been made.
2. On January 1, 2010, Warren Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 600,000 of its own outstanding shares and retired them.
Compute the weighted average number of shares to be used in computing earnings per share for 2010.
3. Korman Company has the following securities in its portfolio of trading equity securities on December 31, 201
Cost Fair Value
5,000 shares of Thomas Corp., Common $155,000 $139,000
10,000 shares of Gant, Common 182,000 190,000
All of the securities had been purchased in 2010. In 2011, Korman completed the following securities transactions:
March 1 Sold 5,000 shares of Thomas Corp., Common @ $31 less fees of $1,500.
April 1 Bought 600 shares of Werth Stores, Common @ $45 plus fees of $550.
The Korman Company portfolio of trading equity securities appeared as follows on December 31, 2011:
Cost Fair Value
10,000 shares of Gant, Common $182,000 $195,500
600 shares of Werth Stores, Common 27,550 25,500
Prepare the general journal entries for Korman Company for:
(a) the 2010 adjusting entry.
(b) the sale of the Thomas Corp. stock.
(c) the purchase of the Werth Stores' stock.
(d) the 2011 adjusting entry.
4. On February 1, 2010, Marsh Contractors agreed to construct a building at a contract price of $6,000,000. Marsh estimated total construction costs would be $4,000,000 and the project would be finished in 2012. Information relating to the costs and billings for this contract is as follows:
2010 2011 2012
Total costs incurred to date $1,500,000 $2,640,000 $4,600,000
Estimated costs to complete 2,500,000 1,760,000 -0-
Customer billings to date 2,200,000 4,000,000 5,600,000
Collections to date 2,000,000 3,500,000 5,500,000
Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2010, 2011, and 2012.
Gross Profit Gross Profit