ACC 557 Homework 4

Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for
$30,000 for services performed in helping the company to incorporate.
Issued 60,000 shares of $5 par value common stock for cash of $375,000.
Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share.
Purchased 2,000 shares of treasury stock for $80,000.

Instructions
Journalize the transactions.
E11-13. On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and
outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.
Apr. 1
June 15
July 10
Dec. 1
15

Issued 25,000 additional shares of common stock for $17 per share.
Declared a cash dividend of $1 per share to stockholders of record on June 30.
Paid the $1 cash dividend.
Issued 2,000 additional shares of common stock for $19 per share.
Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of
record on December 31.

Instructions
a) Prepare the entries, if any, on each of the three dividend dates.
b) How are dividends and dividends payable reported in the nancial statements prepared at
December 31?

ACC 557 Homework 4: Chapters 11 and 12 (4-22-2015)
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ACC 557 Homework 4: Chapters 11 and 12
E12-8. Presented below are two independent situations.
1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at
a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a
$60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At
December 31, the market price of Nevins Fashion was $15 per share. The stock is classied as
available-for-sale.
2. Kanza, Inc., obtained signicant inuence over Rogan Corporation by buying 40% of Rogans
30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015.
On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan
reported a net income of $80,000 for the year.
Instructions
Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.

E12-12. Uttinger Company has the following data at December 31, 2015.

The available-for-sale securities are held as a long-term investment.
Instructions
a) Prepare the adjusting entries to report each class of securities at fair value.
b) Indicate the statement presentation of each class of securities and the related unrealized gain
(loss) accounts.

ACC 557 Homework 4: Chapters 11 and 12 (4-22-2015)
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ACC 557 Homework 4: Chapters 11 and 12
Problems
P11-3A. The stockholders equity accounts of Castle Corporation on January 1, 2015, were as follows.
Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized)
$ 400,000
Common Stock ($1 stated value, 2,000,000 shares authorized)
1,000,000
Paid-in Capital in Excess of ParPreferred Stock
100,000
Paid-in Capital in Excess of Stated ValueCommon Stock
1,450,000
Retained Earnings
1,816,000
Treasury Stock (10,000 common shares)
50,000
During 2015, the corporation had the following transactions and events pertaining to its stockholders
equity.
Feb. 1
Issued 25,000 shares of common stock for $120,000.
Apr. 14
Sold 6,000 shares of treasury stockcommon for $33,000.
Sept. 3
Issued 5,000 shares of common stock for a patent valued at $35,000.
Nov. 10
Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31
Determined that net income for the year was $452,000.
No dividends were declared during the year.
Instructions
a) Journalize the transactions and the closing entry for net income.
b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders
equity accounts. (Use J5 for the posting reference.)
c) Prepare a stockholders equity section at December 31, 2015, including the disclosure of the
preferred dividends in arrears.

ACC 557 Homework 4: Chapters 11 and 12 (4-22-2015)
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ACC 557 Homework 4: Chapters 11 and 12
P12-6A. The following data, presented in alphabetical order, are taken from the records of Nieto
Corporation.

The investment in Sasse common stock is considered to be a long-term available-for-sale security.
Instructions
Prepare a classied balance sheet at December 31, 2015.