Reference no: EM13480307

Problem 1

The charter for Zippy Inc. authorizes the company to issue 500,000 shares of $7, no-par preferred stock and 1,100,000 shares of common stock with $1 par value. During its start-up phase, Zippy Inc. computed the following transactions:

2012

April 6     Issued 550 shares of common stock to the promoters who organized the corporation, receiving cash of $16,500.

April 12   Issued 650 shares of preferred stock for cash of $28,000.

April 14   Issued 1,800 shares of common stock in exchange for land with a market value of $22,000.

Required:

1. Prepare the journal entries for the month of April, 2012.

2. Prepare the stockholder's equity section of Zippy's balance sheet at December 31, 2012. Assume that the company earned net income of $38,000 during this period.

Problem 2

NHS Co. issued $350,000 of 10-year bonds payable on January 1. NHS pays interest each January 1 and July 1 and amortizes any discount or premium by the straight-line method. NHS issued the bonds at a price of $430,000 when the market rate was below 5%.

Required:

Journalize NHS's issuance of the bonds and first semiannual interest payment. Explanations are not required.

Problem 3

Del Mare Inc. earned net income of $210,000 during the year ended December 31, 2012. On December 15, 2012, Del Mare Inc. declared the annual cash dividend on its 3% preferred stock (total par value, $170,000) and a $0.80 per share cash dividend on its common stock (95,000 shares outstanding). Del Mare Inc. then paid the dividends on January 4, 2013.

Required:

Journalize for Del Mare Inc.

a. Declaring the cash dividends on December 15, 2012

b. Paying the cash dividends on January 4, 2013.