Questions -
1. Elston Corporation is authorized to sell 1,000,000 shares of $5 par value common stock. During 2010, its first year of operation, the company has the following stock transaction:
Jan. 1 Paid the state $2,000 for incorporation fees
Jan. 15 Issued 500,000 shares of stock at $6 per share
Jan 30 Attorneys for the company accepted 500 shares of common stock as payment for legal services rendered in helping he company incorporate. The legal services are estimated to have a value of $4,000.
July 2 Issued 100,000 shares of stock for land. The land has an asking price of $900,000. The stock is currently selling on a national exchange at $7 per share.
Sept 5 Purchased 10,000 shares of common stock for the treasury at $10 per share.
Dec 6 Sold 7,000 shares of the treasury stock at $12 per share.
INSTRUCTION - Journalize the transactions for Elston Corporation.
2. Klein Corporation's stockholder's equity section at December 31, 2010 appears below:
Stockholder's Equity Paid-in Capital
Common Stock, $10 Par, 50,000 outstanding $500,000
Paid-in Capital in Excess of Par 150,000
Total Paid-in Capital $650,000
Retained Earnings 150,000
Total Stockholder's Equity $800,000
On June 30, 2011, the Board of Directors of Klein Corporation declared a 15% stock dividend, payable on July 31, 2011, to stockholders of record on July 15, 2011. The fair market value of the Klein Corporation's stock on June 30, 2011 was $12.
On December 1, 2011, the Board of Directors declared a 2 for 1 stock split effective December 15, 2011. Klein Corporation's stock was selling for $20 on December 1, 2011, before the stock split was declared. Par value of the stock was adjusted. Net income for 2011 was $240,000 and there were no cash dividends declared.
INSTRUCTION -
(a) Prepare the journal entries on the appropriate dates to record the stock dividend and stock split.
(b) Fill in the amount that would appear in the Stockholders' Equity section for Klein Corporation at December 31, 2011 for the following items:
1. Common Stock $_________________
2. Number of shares outstanding __________________
3. Par Value per share $__________________
4. Paid-in Capital in Excess of Par $__________________
5. Retained Earnings $__________________
6. Total Stockholder's Equity $__________________
3. On January 1, 2010, Leary Corporation issued $800,000, 9%, 5 years bonds dated January 1, 2010, at 96. The bonds pay semiannual interest on January 1 and July 1. The company uses the straight-line method of amortization and had a calendar year end.
INSTRUCTIONS - Prepare all the journal entries that Leary Corporation would make related to this bond issue through January 1, 2011. Be sure to indicate the date on which the entries would be made.