Reference no: EM131734324

Question 1 - On January 1, 2010 Johnson corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:

Mar. 1   Issued 30,000 shares of common stock for $420,000

Jun.  1   Declared a cash dividend of $2 per shares to stockholders of record on june 15(note: add beginning shares outstanding with the shares issued on Mar. 1 to get total stockholders of record)

Jun. 30   Paid the $2 cash dividend.

Dec. 1    Purchased 10,000 shares of common stock for the treasury for $15 per share

Dec. 20  Reissued 4,000 shares of treasury stock for $18 each

Dec  30  Reissued 6,000 shares of treasury stock for $11 each.

Dec  31  Declared a 3% stock dividend on its common stock when the market value of the common stock was $11 per share

Journal entries to record the above transactions.

Question 2 - The following information is available for Paper Inc.:

Beginning retained earnings                                          $600,000

Cash dividends declared                                                   30,000

Net income for 2014                                                         140,000

Stock dividend declared                                                    10,000

Understatement of last year's depreciation expense  30,000

Based on the preceding information, retained earnings statement for 2014

Question 3 - James (investor) Corporation acquires 35% of the common shares of Heck (investee) Company for $300,00 on Jan. 1, 2014.

For 2014, Heck reports net income of $50,000 and paid dividends of $16,000.

Instructions.

a. Prepare the entries for these transactions that James Co. would make.

b. Compute the balance in the stock investment account of James Co.

Question 4 - On Jan. 1, James Co. issued $400,000, 6%, 5-year bonds at 103. Interest is payable semiannually on July 1 and Jan. 1.Straight-line amortization method is used.

Instructions - Journal entries to record the

(A) Issuance of the Bonds

(B) Payment of interest on July 1, assuming no previous accrual of interest. Need to also show the entry of the amortization of the premium to interest.

(C) Accrual of interest on Dec 31. Need to also show the entry of the amortization of the premium to interest.