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Chapter 15: Question 7Q (page 810)
Describe the accounting for the issuance for cash of no-par value common stock at a price in excess of the stated value of the common stock.
The issuance of no-par value stocks is recorded as debiting the cash account and crediting the equity account.
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(Computation of Retained Earnings) The following information has been taken from the ledger accounts of Isaac Stern Corporation.
Total income since incorporation $317,000
Cash dividends paid 60,000
Total value of stock dividends distributed 30,000
Gains on treasury stock transactions 18,000
Unamortized discount on bonds payable 32,000
Instructions
Determine the current balance of retained earnings.
Twenty-five thousand shares reacquired by Elixir Corporation for \(53 per share were exchanged for undeveloped land that has an appraised value of \)1,700,000. At the time of the exchange, the common stock was trading at $62 per share on an organized exchange.
Instructions
a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method.
b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice.
Explain how underwriting costs and accounting and legal fees associated with the issuance of stock should be recorded.
Kaymer Corporation issued 300 shares of \(10 par value ordinary shares for \)4,500. Prepare Kaymer鈥檚 journal entry.
(Computation of Book Value per Share) Morgan Sondgeroth Inc. began operations in January 2015 and reported the following results for each of its 3 years of operations.
2015 \(260,000net loss 2016 \)40,000 net loss 2017 \(800,000 net income
At December 31, 2017, Morgan Sondgeroth Inc. capital accounts were as follows.
8% cumulative preferred stock, par value \)100;
authorized, issued, and outstanding 5,000 shares \(500,000
Common stock, par value \)1.00; authorized 1,000,000 shares;
issued and outstanding 750,000 shares \(750,000
Morgan Sondgeroth Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Sondgeroth began operations. The state law permits dividends only from retained earnings.
Instructions
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