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Resources: Ch. 11 & 12 of Financial Accounting...

Resources: Ch. 11 & 12 of Financial Accounting

Complete Exercises E11-15, E12-1, & E12-2.

Complete Problem 11-6A.

Submit as a Microsoft® Excel® or Word document.

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E11-15 On October 31, the stockholders’ equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity and outstanding shares. Use the following column headings: Before Action,After Stock Dividend, and After Stock Split. E12-1 Max Weinberg is studying for an accounting test and has developed the following questions about investments. 1. What are three reasons why companies purchase investments in debt or stock securities? 2. Why would a corporation have excess cash that it does not need for operations? 3. What is the typical investment when investing cash for short periods of time? 4. What are the typical investments when investing cash to generate earnings? 5. Why would a company invest in securities that provide no current cash flows? 6. What is the typical stock investment when investing cash for strategic reasons? Instructions Provide answers for Max. E12-2 Foren Corporation had the following transactions pertaining to debt investments. Jan. 1 Purchased 50 8%, $1,000 Choate Co. bonds for $50,000 cash plus brokerage fees of $900. Interest is payable semiannually on July 1 and January 1. July 1 Received semiannual interest on Choate Co. bonds. July 1 Sold 30 Choate Co. bonds for $34,000 less $500 brokerage fees. Instructions (a) Journalize the transactions. (b) Prepare the adjusting entry for the accrual of interest at December 31. P12-6A The following data, presented in alphabetical order, are taken from the records of Urbina Corporation. Accounts payable $ 240,000 Accounts receivable 140,000 Accumulated depreciation—building 180,000 Accumulated depreciation—equipment 52,000 Allowance for doubtful accounts 6,000 Bonds payable (10%, due 2019) 500,000 Buildings 950,000 Cash 42,000 Common stock ($10 par value; 500,000 shares authorized, 150,000 shares issued) 1,500,000 Dividends payable 80,000 Equipment 275,000 Goodwill 200,000 Income taxes payable 120,000 Investment in Flott common stock (10% ownership), at cost 278,000 Investment in Portico common stock (30% ownership), at equity 380,000 Land 390,000
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Answer 14052016(1) Omar Company, Foren Corporation, Arnold Corporation.xlsx
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