Prepare journal entries to record the transactions assuming: a.) The securities are classified as FVTOCI financial assets-equity. b.)The equity method is used. Show the amounts that would be reported on the financial statements of Merrill Company at December 31, 2018, under each a
Q: Green Corporation is authorized to issue 120,000 common shares and 80,000, $4 preferred shares. At…
A: Shareholder’s Equity: It can be referred to as one of the parts of the balance sheet other than the…
Q: Monona Company reported net income of $29,975 for 2019. During all of 2019, Monona had 1,000 shares…
A: Earnings per share refer to the amount that is earned by the stockholders on every share held by…
Q: What is the balance of the share premium account immediately after the retirement of the shares?
A: Given information is: The equity accounts of UBAS Co. on December 31, 2019 were as follows:…
Q: On January 1, 2021, MNO Company acquired 12,500 of the outstanding common shares of Esther…
A: The portion of the dividend is based on the portion of holdings. The holding can be calculated by…
Q: During the year ended December 31, 2019, and in the following montha of January and February 2020,…
A: The FV- fair Value of Securities is considered as the current value at which the security is trading…
Q: Ringmeup Inc. had net income of $112,400 for the year ended December 31, 2019. At the beginning of…
A: Basic earnings per share = (Net Income - Preference Dividend)/ Weighted number of shares outstanding
Q: Ringmeup Inc. had net income of $186,400 for the year ended December 31, 2019. At the beginning of…
A: Basic Earnings per share of common stock is computed by dividing the Net income less preferred…
Q: Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported…
A: Financial StatementFinancial Statement is the combination of the three major reports on a business.…
Q: Blue Spruce Limited reported profit of $436,010 for its November 30, 2021, year end. Cash dividends…
A: Profit available to common share holders= Net profit- Preference dividend = 436010-69500 = 366510
Q: Ringmeup Inc. had net income of $197,300 for the year ended December 31, 2019. At the beginning of…
A: Earnings Per Share: =Earnings attributable to shareholders / Weighted average number of shares…
Q: The ABC Company began operations in January 2018 and reported the following results for each of its…
A: Introduction: Preference share holders are those capital providers for the company who receives…
Q: Lucas Company reports net income of $5,125 for the year ended December 31, 2019, its first year of…
A: Earnings per share (EPS): The amount of net income available to each shareholder per common share…
Q: On January 1, 2020 ,Herron Corporation purchased 5,000 shares of treasury stock. Other information…
A: Return on Common Stockholders' Equity will be calculated using following Formulae : Return on Common…
Q: Ringmeup Inc. had net income of $106,300 for the year ended December 31, 2019. At the beginning of…
A: Computation of weighted average outstanding sharesFor the year ended December 31, 2019 Particulars…
Q: Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported…
A: Effect of given transactions on balance sheet:
Q: Flyaway Travel Company reported net income for 2021 in the amount of $90,000. During 2021, Flyaway…
A:
Q: On January 1, 2019, Powder Company provided the following shareholders’ equity section of its…
A: Stockholders’ equity: It can be defined as the residual amount of assets that are available to the…
Q: Madison Company earned net income of $75,000 during the year ended December 31, 2018. On December…
A: Annual Dividend to Preferred shareholders = Par value of preferred share x rate of dividend =…
Q: Red Hat Company began operations in January 2018 and reported the following results of operations…
A: Book value per common stock = (Total stockholder's equity-(liquidation value of preferred stock+…
Q: The Dark Red Company, which started operations in 2018, paid dividends at the end of 2018,2019 and…
A: The participating preference shareholder is entitled for fixed preference dividend and also the…
Q: On January 1, 2020, Keith Company paid $96,000 for 8,000 shares of Jerry Company common stock. The…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: On December 31, 2020, the Frisbee Company had 262,000 shares of common stock issued and outstanding.…
A: Earnings per share indicate the profits per share of common stockholders. It can be calculated by…
Q: Kimber Inc. reported net income of $177,500 during 2021. At January 1, 2021 Kimber had 100,000…
A: EPS stands for earning per share. A company has two types of EPS i.e basic and diluted. Basic EPS is…
Q: At the end of 2019, Haley Corporation had the following equity accounts and balances: Common stock,…
A:
Q: At the beginning of 2021, Hamilton Company had retained earnings of $320,000. During the year…
A: Retained earnings represent the accumulated funds available to the company out of which the dividend…
Q: Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported…
A: Required journal entries:
Q: Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported…
A: Effect of given transactions on income statement: Results of the excel sheet is as follows:
Q: Specific Motor Inc., makes and sells commercial vehicles. By December 31, 2018, the company reported…
A: The income statement is a financial statement that represents the financial performance of the…
Q: At the beginning of 2019, Hardin Company had 280,000 shares of $10 par common stock outstanding.…
A: The shares that are with investors are said to be issued and outstanding shares.
Q: Ringmeup Inc. had net income of $151,000 for the year ended December 31, 2019. At the beginning of…
A: Calculation of Basic Earnings per share: Thus, Basic Earnings per share is $2.84
Q: Flatfish Limited reported the following items in shareholders' equity on December 31, 2020: Share…
A: Dividend is the return which is paid to the shareholders for investing in the business entity and…
Q: On January 1, 2019, Osgood Film Studios reported the following alphabetical list of shareholders'…
A: A statement of shareholders' equity details the changes within the equity section of the balance…
Q: On January 1, 2020, Concord Corporation purchased 1,100 shares of treasury stock. Other information…
A: Formula for Return on common stockholder's equity: Return on common stockholder's equity = (Net…
Q: At December 31,2018, ABC Company had 20,000 shares of P 20 par value treasury shares that were…
A: difference in repurchase price and issue price are transferred to additional paid in…
Q: Clark Company has 100,000 shares of common stock ($1 par value) outstanding on January 1, 2017, with…
A: Stockholder's Equity - Stockholder's Equity includes the amount contributed by shareholders issued…
Q: #7 On January 1, 2019, Kittson Company had a retained earnings balance of $218,600. It is subject to…
A: GIVEN 1. Cash dividends of $3 per share on 4,000 shares of common stock were declared and paid.…
Q: Lucas Company reports net income of $5,125 for the year ended December 31, 2019, its first year of…
A: Earnings per share (EPS): The amount of net income available to each shareholder per common share…
Q: Titanic Corporation's net income for the year ended December 31, 2019, is $380,000. On June 30,…
A: Ending balance of retained earnings can be computed by adding the net income and deducting the…
Q: The balance sheet of Chunn Industries included the following shareholders’ equity section at…
A: Entry to record the purchase and retirement of 1 million shares for $9 million:
Q: Crane Inc. began operations in January 2018 and reported the following results for each of its 3…
A: a)Computation of the book value of the common stock at December 31, 2020 as follows:- Computation…
Q: Abajo, Inc. went into business on January 1, 2017 when it issued 100 shares of stock for $10,000. No…
A: Return on Equity = Net IncomeShareholder's Equity it is the measure of financial performance and it…
Q: At the beginning of 2019, Hardin Company had 200,000 shares of $10 par common stock outstanding.…
A: Solution: Introduction: Share of stock represents both Common and Preferred stock of capital which…
Q: Ringmeup Inc. had net income of $148,800 for the year ended December 31, 2019. At the beginning of…
A: Weighted average number of outstanding shares = 38,000×412 + 53,000×712 + 48,300×112…
Q: During the year 2019, Howard industries reported net income of P1,000,000. The company declared and…
A: Earnings per share = Earnings after payment of preferred dividends Weighted Number of common shares…
Q: During the year ended December 31, 2020, Gluco Inc. split its stock on a 3-for-1 basis. In its…
A: Net income: The bottom line of income statement which is the result of excess of earnings from…
Q: During the year ended December 31, 2020, Gluco Inc. split its stock on a 5-for-1 basis. In its…
A: EPS = Net income / Average shares of common stock outstanding for that year
Q: Torres Company began business on June 30, 2018. At that time, it issued 17,500 shares of $40 par…
A: Dividend Distribution : Cumulative Preferred stockholder have the right to receive dividend on…
Q: On January 1, 2021, Eugene Co. had retained earnings of P1,240,000. During 2021, the co. earned net…
A: Retained earnings balances are adjusted for many reasons. This is the summary of retained earnings.…
Q: ABC Co. issued share capital of 20,000 shares, P5 par, at P10 per share. The accumulated profits on…
A: Treasury Stock refers to the company’s own outstanding stock bought back from stockholders. These…
The following activities relate to Merrill Company during the years 2018 and 2019:
2018:
Feb. 15 Merrill purchased 10,000 shares of Hendershot Equipment stock for $40 per share.
Dec. 1 Merrill received an $0.80-per-share cash dividend from Hendershot Equipment.
Dec. 31 Hendershot Equipment common stock had a closing market price of $97 per share. Hendershot’s 2018 net income was $120,000.
2019:
July 1 Merrill sold all 10,000 shares of Hendershot Equipment stock for $42 per share.
Additional information: Hendershot Equipment had 50,000 shares of common stock outstanding on January 1, 2018.
Required:
- Prepare
journal entries to record the transactions assuming: a.) The securities are classified as FVTOCI financial assets-equity. b.)The equity method is used. - Show the amounts that would be reported on the financial statements of Merrill Company at December 31, 2018, under each assumption.
- Can Merrill use the equity method to account for its investment in Hendershot Equipment?
Step by step
Solved in 6 steps
- On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.Monona Company reported net income of 29,975 for 2019. During all of 2019, Monona had 1,000 shares of 10%, 100 par, nonconvertible preferred stock outstanding, on which the years dividends had been paid. At the beginning of 2019, the company had 7,000 shares of common stock outstanding. On April 2, 2019, the company issued another 2,000 shares of common stock so that 9,000 common shares were outstanding at the end of 2019. Common dividends of 17,000 had been paid during 2019. At the end of 2019, the market price per share of common stock was 17.50. Required: 1. Compute Mononas basic earnings per share for 2019. 2. Compute the price/earnings ratio for 2019.Lyon Company shows the following condensed income statement information for the year ended December 31, 2019: Lyon declared dividends of 6,000 on preferred stock and 17,280 on common stock. At the beginning of 2019, 10,000 shares of common stock were outstanding. On May 1, 2019, the company issued 2,000 additional common shares, and on October 31, 2019, it issued a 20% stock dividend on its common stock. The preferred stock is not convertible. Required: 1. Compute the 2019 basic earnings per share. 2. Show the 2019 income statement disclosure of basic earnings per share. 3. Draft a related note to accompany the 2019 financial statements.
- Hyde Corporations capital structure at December 31, 2018, was as follows: On July 2, 2019, Hyde issued a 10% stock dividend on its common stock and paid a cash dividend of 2.00 per share on its preferred stock. Net income for the year ended December 31, 2019, was 780,000. What should be Hydes 2019 basic earnings per share? a. 7.80 b. 7.09 c. 7.68 d. 6.73Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1, 000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50, 000 to retire bonds with a face value (and book value) of 50, 000. e. On July 2, 2019, Farrell purchased equipment for 63, 000 cash. f. On December 31, 2019, land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows. (Appendix 21.1) Spreadsheet and Statement Refer to the information for Farrell Corporation in P21-13. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support a 2019 statement of cash flows. (Hint: Combine the income statement and December 31, 2019, balance sheet items for the adjusted trial balance. Use a retained earnings balance of 291,000 in this adjusted trial balance.) 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.
- Anoka Company reported the following selected items in the shareholders equity section of its balance sheet on December 31, 2019, and 2020: In addition, it listed the following selected pretax items as a December 31, 2019 and 2020: The preferred shares were outstanding during all of 2019 and 2020; annual dividends were declared and paid in each year. During 2019, 2,000 common shares were sold for cash on October 4. During 2020, a 20% stock dividend was declared and issued in early May. At the end of 2019 and 2020, the common stock was selling for 25.75 and 32.20, respectively. The company is subject to a 30% income tax rate. Required: 1. Prepare the comparative 2019 and 2020 income statements (multiple-step), and the related note that would appear in Anokas 2020 annual report. 2. Next Level Compute the price/earnings ratio for 2020. How does this compare to 2019? Why is it different?Statement of Stockholders' Equity At the end of 2019, Stanley Utilities Inc. had the following equity accounts and balances: During 2020, Haley engaged in the following transactions involving its equity accounts: Sold 5,000 shares of common stock for $19 per share. Sold 1.200 shares of 12%, $50 par preferred stock at $75 per share. Declared and paid cash dividends of $22,000. Repurchased 1,000 shares of treasury stock (common) for $24 per share. Sold 300 of the treasury shares for $26 per share. Required: Prepare the journal entries for Transactions a through e. Assume that 2020 net income was $123,700. Prepare a statement of stockholders equity at December 31, 2020.Statement of Stockholders' Equity At the end of 2019, Stanley Utilities Inc. had the following equity accounts and balances: During 2020, Stanley Utilities engaged in the following transactions involving its equity accounts: Sold 3,300 shares of common stock for $15 per share. Sold 1,000 shares of 12%, $100 par preferred stock at $105 per share. Declared and paid cash dividends of $8,000. Repurchased 1,000 shares of treasury stock (common) for $38 per share. Sold 400 of the treasury shares for $42 per share. Required: Prepare the journal entries for Transactions a through e. Assume that 2020 net income was $87,000. Prepare a statement of stockholders equity at December 31, 2020.
- Roseau Company is preparing its annual earnings per share amounts to be disclosed on its 2019 income statement. It has collected the following information at the end of 2019: 1. Net income: 120,400. Included in the net income is income from continuing operations of 130,400 and a loss from discontinued operations (net of income taxes) of 10,000. Corporate income tax rate: 30%. 2. Common stock outstanding on January 1, 2019: 20,000 shares. 3. Common stock issuances during 2019: July 6, 4,000 shares; August 24, 3,000 shares. 4. Stock dividend: On October 19, 2019, the company declared a 10% stock dividend that resulted in 2,700 additional outstanding shares of common stock. 5. Common stock prices: 2019 average market price, 30 per share; 2019 ending market price, 27 per share. 6. 7% preferred stock outstanding on January 1, 2019: 1,000 shares. Terms: 100 par, nonconvertible. Current dividends have been paid. No preferred stock issued during 2019. 7. 8% convertible preferred stock outstanding on January 1, 2019: 800 shares. The stock was issued in 2018 at 130 per share. Each 100 par preferred stock is currently convertible into 1.7 shares of common stock. Current dividends have been paid. To date, no preferred stock has been converted. 8. Bonds payable outstanding on January 1, 2019: 100,000 face value. These bonds were issued several years ago at 97 and pay annual interest of 9.6%. The discount is being amortized in the amount of 300 per year. Each 1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted. 9. Compensatory share options outstanding: Key executives may currently acquire 3,000 shares of common stock at 20 per share. The options were granted in 2018. To date, none have been exercised. The unrecognized compensation cost (net of tax) related to the options is 4 per share. Required: 1. Compute the basic earnings per share. Show supporting calculations. 2. Compute the diluted earnings per share. Show supporting calculations. 3. Show how Roseau would report these earnings per share figures on its 2019 income statement. Include an explanatory note to the financial statements.Frost Company has accumulated the following information relevant to its 2019 earningsper share. 1. Net income for 2019: 150,500. 2. Bonds payable: On January 1, 2019, the company had issued 10%, 200,000 bonds at 110. The premium is being amortized in the amount of 1,000 per year. Each 1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted. 3. Bonds payable: On December 31, 2017, the company had issued 540,000 of 5.8% bonds at par. Each 1,000 bond is currently convertible into 11.6 shares of common stock. To date, no bonds have been converted. 4. Preferred stock: On July 3, 2018, the company had issued 3,800 shares of 7.5%, 100 par, preferred stock at 108 per share. Each share of preferred stock is currently convertible into 2.45 shares of common stock. To date, no preferred stock has been converted and no additional shares of preferred stock have been issued. The current dividends have been paid. 5. Common stock: At the beginning of 2019, 25,000 shares were outstanding. On August 3, 7,000 additional shares were issued. During September, a 20% stock dividend was declared and issued. On November 30, 2,000 shares were reacquired as treasury stock. 6. Compensatory share options: Options to acquire common stock at a price of 33 per share were outstanding during all of 2019. Currently, 4,000 shares may be acquired. To date, no options have been exercised. The unrecognized compens Frost Company has accumulated the following information relevant to its 2019 earnings ns is 5 per share. 7. Miscellaneous: Stock market prices on common stock averaged 41 per share during 2019, and the 2019 ending stock market price was 40 per share. The corporate income tax rate is 30%. Required: 1. Compute the basic earnings per share. Show supporting calculations. 2. Compute the diluted earnings per share. Show supporting calculations. 3. Indicate which earnings per share figure(s) Frost would report on its 2019 income statement.Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
