Reference no: EM132764491

Question -

Q1. Peck Corporation is authorized to issue 20,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $5 par value common stock. On January 1, 2020, the ledger contained the following stockholders' equity balances.

Preferred Stock (10,000 shares) $500,000

Paid-in Capital in Excess of Par-Preferred Stock 75,000

Common Stock (70,000 shares) 350,000

Paid-in Capital in Excess of Par-Common Stock 700,000

Retained Earnings 300,000

During 2020, the following transactions occurred.

Feb. 1 Issued 2,000 shares of preferred stock for land having a fair value of $120,000.

Mar. 1 Issued 1,000 shares of preferred stock for cash at $65 per share.

July 1 Issued 16,000 shares of common stock for cash at $7 per share.

Sept. 1 Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market price for the preferred stock was $70 and the fair value for the patent was indeterminable.

Dec. 1 Issued 8,000 shares of common stock for cash at $7.50 per share. Dec. 31 Net income for the year was $260,000. No dividends were declared. Instructions

(a) Journalize the transactions and the closing entry for net income.

Q2. Bond Issuance at Par, Discount, Premium, and Interest calculation.

A. Laudie Company issued $400,000 of 9%, 10-year bonds on January 1, 2020, at face value. Interest is payable annually on January 1, 2021.

Instructions - Prepare the journal entries to record the following events.

(a) The issuance of the bonds.

(b) The accrual of interest on December 31, 2020.

(c) The payment of interest on January 1, 2021.

B. Swisher Company issued $2,000,000 of bonds on January 1, 2020.

Instructions - Prepare the journal entry to record the issuance of the bonds if they are issued at (1) 100, (2) 98, and (3) 103.