Problem 1. On Aug 1 Hunter Corporation issues 600,000 of 10 year 10 % bonds dated Aug 1st for 624,000. Interest is paid semi annually on Feb 1st and August 1st. Present the entries in general journal form to record the following:
a) Issuance of the Bonds
b) Accrual of interest and amortization of 1,000.00 of bond premium for the year on Dec 31, using the straight line method.
c) Deposit 12,200.00 in a bond sinking fund
d) Purchase various securities with sinking fund cash, cost 9,500.00
e) Received 680.00 of income on sinking fund investments, depositing the cash into the sinking fund.
Problem 2. Present entries in general journal form to record the selected transactions described below.
a) Issued 1,000,000 of 10 year 10 year 12% bonds at 98.
b) Amortized 2,000.00 of bond discount for the current year using the straight line method.
c. Redeemed bonds at 99. The bonds were carried at 992, 000 at the time of redemption.
Problem 3. Present these entries in the general journal form
Feb 10 the board of directors reduced the par of the common shares from 100 to 25. This action increased the number of outstanding shares to 400,000
Mar 5 Purchased 10,000 shares of own stock at $47, recording the treasury stock at cost.
April 10 Declared a dividend of 1 dollar per share on the outstanding shares of common stock.
May 5 Paid the dividend declared on April 10th.
Aug 12 Declared a 3% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is 40.00)
Sept 22 Issued the certificates for the common stock dividend declared on August 12.
Dec 31 The board of directors authorized the appropriation necessitated by the holdings of treasury stock.
Problem 4. A company had a stock outstanding as follows during each of its five years of operations: 2,000 shares of 10, 50 dollars par cumulative, participating preferred stock and 20,000 shares of 10 dollar common stock. The preferred stock contact provides that the preferred stock shall participate in distributions of additional dividends after allowance of 1 dollar dividends per share on the common stock. The additional dividends to be amounts distributed are presented below. Determine the total and per share dividends for each class of stock for year by completing the schedule:
preferred common
Year Dividends Total Per Share Total Per Share
1 5,000.00
2 10,000.00
3 18,000.00
4 30,000.00
5 60,000.00