AFM291 Chapter 13: chapter 13.7

At the end of 2017, Jeffco Inc. had the following equity accounts and balances:

During 2018, Jeffco engaged in the following transactions involving its equity accounts:

Issued 8,000 common shares for $35 per share.

Issued 1,000 shares of 9%, $120 stated value preferred shares at $125 per share.

Declared and paid cash dividends of $15,000.

Repurchased and cancelled 500 common shares for $52 per share.

Required:

1. Prepare the journal entries for a through d. For a compound transaction, for those boxes in which no entry is required, leave the box blank.

2. Assume that 2018 net income was $89,600. Prepare a partial statement of financial position showing only the shareholders' equity section at December 31, 2018.

At the end of 2017, Jeffco Inc. had the following equity accounts and balances:

During 2018, Jeffco engaged in the following transactions involving its equity accounts:

Issued 8,000 common shares for $35 per share.

Issued 1,000 shares of 9%, $120 stated value preferred shares at $125 per share.

Declared and paid cash dividends of $15,000.

Repurchased and cancelled 500 common shares for $52 per share.

Required:

1. Prepare the journal entries for a through d. For a compound transaction, for those boxes in which no entry is required, leave the box blank.

2. Assume that 2018 net income was $89,600. Prepare a partial statement of financial position showing only the shareholders' equity section at December 31, 2018.

During all 2015, Abel inc had 831,000 shares of common stock and 45,000 shares of $80 par value, 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Abel paid cash dividends of $550,000 to common shareholders, and also cash dividends of ??? to preferred shareholders, on dec 15, 2015.

Abel’s net income for the year ended dec 31, 2015, was $2,850,000. The income tax rate is 40%.

As part of an incentive compensation plan, Abel granted 22,000 incentive stock options to division managers at dec 31, 2013. Each option permits its holder to buy one share of common stock at an exercise price of $36 per share which can be exercise one year from that date. The market price of the common stock average $40 per share during 2015.

On july 12, 2013, Abel issued $800,000 of convertible 10%bonds at face value. Each $1,000 bond is convertible into 40 common shares.

A.Compute Abel’s basic earnings per share for the year ended dec 31, 2015.

B.Compute Abel’s fully diluted earnings per share for the year ended dec 31, 2015.