AFM 461 Lecture : Rollover Rundown All the rollovers learned summarized into 2 pages.

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blackmammoth399

16 Oct 2011

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM 461

Professor

Stanley Laiken

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Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:


Joe Jackson	400
Mike Jackson (Joeâs son)	200
Jane Jackson (Joeâs daughter)	200
Vinnie Price (unrelated)	200
Total	1,000

Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000.

During this year, the corporation made the following distributions to its shareholders:

03/31: Paid a dividend of $10 per share to each shareholder ($10,000 in total).

06/30: Redeemed 200 shares of Joeâs stock for $200,000. Joeâs basis in the 200 shares redeemed was $100,000.

09/30: Redeemed 60 shares of Vinnieâs stock for $60,000. His basis in the 60 shares was $36,000.

12/31: Paid a dividend of $10/share to each shareholder ($7,400 in total).

Compute the corporationâs accumulated E&P at January 1 of next year. (Round all intermediate calculations to 2 decimal places. Round final answers to the nearest dollar amount.)

rubymole112

Problem 18-12 Various shareholders' equity topics; comprehensive[LO18-1, 18-4, 18-5, 18-6, 18-7, 18-8]

Part A

In late 2015, the Nicklaus Corporation was formed. The corporatecharter authorizes the issuance of 5,000,000 shares of common stockcarrying a $1 par value, and 1,000,000 shares of $5 par value,noncumulative, nonparticipating preferred stock. On January 2,2016, 3,000,000 shares of the common stock are issued in exchangefor cash at an average price of $15 per share. Also on January 2,all 1,000,000 shares of preferred stock are issued at $30 pershare.

Required:

1.	Prepare journal entries to record these transactions.(If no entry is required for a particular transaction,select "No journal entry required" in the first accountfield.)

2.	Prepare the shareholders' equity section of the Nicklaus balancesheet as of March 31, 2016. (Assume net income for the firstquarter 2016 was $1,500,000.)

Part B
During 2016, the Nicklaus Corporation participatedin three treasury stock transactions:

a.	On June 30, 2016, the corporation reacquires 190,000 shares forthe treasury at a price of $17 per share.
b.	On July 31, 2016, 45,000 treasury shares are reissued at $20per share.
c.	On September 30, 2016, 45,000 treasury shares are reissued at$15 per share.

Required:

1.	Prepare journal entries to record these transactions.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)

2.	Prepare the Nicklaus Corporation shareholders' equity section asit would appear in a balance sheet prepared at September 30, 2016.(Assume net income for the second and third quarter was$2,950,000.)

Part C

On October 1, 2016, Nicklaus Corporation receives permission toreplace its $1 par value common stock (5,000,000 shares authorized,3,000,000 shares issued, and 2,900,000 shares outstanding) with anew common stock issue having a $.50 par value. Since the new parvalue is one-half the amount of the old, this represents a 2-for-1stock split. That is, the shareholders will receive two shares ofthe $.50 par stock in exchange for each share of the $1 par stockthey own. The $1 par stock will be collected and destroyed by theissuing corporation.

On November 1, 2016, the NicklausCorporation declares a $0.13 per share cash dividend on commonstock and a $0.30 per share cash dividend on preferred stock.Payment is scheduled for December 1, 2016, to shareholders ofrecord on November 15, 2016.

On December 2, 2016, the NicklausCorporation declares a 1% stock dividend payable on December 28,2016, to shareholders of record on December 14. At the date ofdeclaration, the common stock was selling in the open market at $15per share. The dividend will result in 58,000 (0.01 Ã 5,800,000)additional shares being issued to shareholders.

Required:

Prepare journal entries to record the declaration and payment ofthese stock and cash dividends. (If no entry is requiredfor a transaction/event, select "No journal entry required" in thefirst account field.)

1.Record the entry for a 2-for-1 stock split.

2.Record declaration of cash dividend for common shares andpreferred shares.

3.Record the entry on date of record.

4.Record payment of cash dividend for common shares andpreferred shares.

5.Record declaration of common stock dividend.

6.Record distribution of common stock dividend.

2.	Prepare the December 31, 2016, shareholders' equity section ofthe balance sheet for the Nicklaus Corporation. (Assume net incomefor the fourth quarter was $2,450,000.)

3.	Prepare a statement of shareholders' equity for NicklausCorporation for 2016. (Amounts to be deducted should beindicated with a minus sign. Enter your answers inthousands.)

Ty Koon, Harry Pitts and Eileen Dover are the founders of Sharpe Incorporated. The charter of the corporation authorized 500,000 shares of $5 par common stock, and 50,000 shares of $40 par, 5%, preferred stock. The company began business on January 1 of the current year.

Selected transactions completed by Sharpe Incorporated during the fiscal year-ending December 31, 2013, are as follows:

Jan 1 Issued 16,000 shares of $5 par common stock at $18, receiving cash.

Jan 1 Issued 7,200 shares of $40 par preferred 5% stock at $42 for cash. The dividends are payable semi-annually.

Jan 31 Purchased a two-year insurance policy for $34,080.

Feb 1 Purchased equipment for $290,000 in exchange for paying $50,000, issuing a $50,000, 180-day, 5% note payable, and issuing 9,500 shares of common stock.

May 1 Purchased 1,200 shares of the companyâs own common stock at $22 per share.

June 1 Declared a cash dividend at the stated amount on the preferred stock.

June 30 Paid the cash dividend on the preferred stock.

July 1 Issued $1,000,000 of 9-year, 8% bonds with interest payable semiannually. The amount of cash received was $1,092,880.

July 30 Paid the amount due on the note payable signed on February 1.

Aug 1 Sold 450 shares of treasury common stock purchased on May 1 for $26 per share.

Oct 1 Purchased 30,000 of the 100,000 outstanding shares of Precision Corporation for $5.10 per share, plus a $125 commission to the stockbroker.

Oct 16 Sold 250 shares of treasury common stock purchased on May 1 for $20 per share.

Nov. 1 Borrowed $36,000 from Second Bank by issuing a 90-day, 7% note.

Dec 15 Declared a cash dividend at the stated amount to preferred stockholders and $.50 per share on the outstanding common shares. The date of record is December 30, and the dividend is payable January 15, 2014.

Dec 31 Record revenue for the year of $1,975,000, receiving $500,000 in cash with the remainder on account.

Dec 31 Record expenses for the year (one compound entry). All were paid in cash, except for $30,000 on account.

Rent $170,000

Utilities 13,200

Salaries 760,000

Payroll tax expense 45,600

Advertising 120,000

Medical insurance 32,000

Commissions 63,000

Legal and accounting 18,000

Miscellaneous 8,400

Dec. 31 Paid the semiannual interest and amortized the premium on the bonds issued on July 1.

Dec. 31 Received a cash dividend from Precision Corporation of $0.10 per share.

Dec. 31 Precision Corporation reported earnings of $25,000 for the period from October 1 to December 31.

1). Wirte a GENERAL JOURNAL

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AFM 461 Lecture : Rollover Rundown All the rollovers learned summarized into 2 pages.

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