Assignment -
I. Some of the account balances of Mali Company at December 31, 20x0 are shown below:
6% Preferred Stock ($100 par, 2,000 shares authorized) $ 20,000
PCIEP, Preferred 3,000
Common Stock ($10 par, 100,000 shares authorized) 500,000
PCIEP, Common 100,000
Retained Earnings 304,000
Treasury Stock-Preferred (50 shares at cost) 5,500
Treasury Stock-Common (1,000 shares at cost) 16,000
The price of the company's common stock has been increasing steadily on the market; it was $21 on January 1, 20x1, advanced to $24 by July 1, and to $27 at the end of the year 20x1. The preferred stock was not openly traded, but was appraised at $120 per share during 20x1.
1) Give the proper journal entries for each of the following occurred in 20x1:
(1) The company declared a property dividend on April 1. Each common stockholder was to receive one share of Washington for every 10 shares outstanding. Mali had 8,000 shares of Washington (2% of total outstanding stock) which was purchased a few weeks ago for $68,400. The market value of Washington stock was $16 per share on April 1. Record appreciation only on the shares distributed.
(2) The company resold the 50 shares of preferred stock held in the treasury for $116 per share.
(3) On July 1, the company declared a 5% stock dividend to the common stockholders.
(4) On October 1, the company incurred a fire loss of $7,000 to its warehouse (ordinary loss).
(5) On October 15, the company declared a cash dividend of $100,000. Allocate the dividend between common and preferred stock. Assume the preferred stock is non-cumulative.
2) Prepare the stockholders' equity section of the balance sheet at December 31, 20x1.
II. During 2006, Ellis Corp. had 370,000 shares of $20 par common stock outstanding. On January 1, 2006, 2,000 bonds (stated rate, 8%) were issued with a maturity value of $1,000 each. To enhance the bond sale, the company offered a conversion of 50 shares of common stock for each bond at the option of the purchaser. Net income for 2006 was $464,000. The income tax rate was 30 percent. Compute the diluted earnings per share.
III. Venz Company's net income for 20x1 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 20x0, each exercisable for one share at $6. None has been exercised, and 10,000 shares of common were outstanding during 20x1. The average market price of Venz's stock during 20x1 was $20.
1) Compute diluted EPS for 20x1.
2) Assume the same facts as those for Part 1), except that the 1,000 options were issued on October 1, 20x1 (rather than in 20x0). The average market price during the last three months of 20x1 was $20.
Attachment:- Assignment Files.rar