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    Journalize transactions for treasury stock

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    1. Walton Corporation has the following stockholders' equity accounts
    on January 1, 2005:
    Common Stock, $10 par value ..................... $1,500,000
    Paid-in Capital in Excess of Par ................ 200,000
    Retained Earnings ............................... 500,000
    ??????????
    Total Stockholders' Equity .................... $2,200,000

    The company uses the cost method to account for treasury stock
    transactions. During 2005, the following treasury stock
    transactions occurred:

    April 1 Purchased 9,000 shares at $15 per share.
    August 1 Sold 3,000 shares at $18 per share.
    October 1 Sold 3,000 shares at $13 per share.

    INSTRUCTIONS
    (a) Journalize the treasury stock transactions for 2005.
    (b) Prepare the Stockholders' Equity section of the balance sheet
    for Walton Corporation at December 31, 2005. Assume net income
    was $110,000 for 2005.

    2. The following items were shown on the balance sheet of Herman
    Corporation on December 31, 2005:

    Stockholders' Equity
    Paid-In Capital
    Capital Stock
    Common stock, $5 par value, 240,000 shares
    authorized; ______ shares issued and ______
    outstanding .................................. $1,100,000

    Additional paid-in capital
    In excess of par value ......................... 110,000
    ??????????
    Total paid-in capital ........................ 1,210,000

    Retained Earnings .................................. 500,000
    ??????????
    Total paid-in capital and retained earnings .. 1,710,000
    Less: Treasury stock (10,000 shares) .............. (110,000)
    ??????????
    Total stockholders' equity ................... $1,600,000

    INSTRUCTIONS
    Complete the following statements and show your computations.

    (a) The number of shares of common stock issued was _______________.

    (b) The number of shares of common stock outstanding was __________.

    (c) The sales price of the common stock when issued was $__________.

    (d) The cost per share of the treasury stock was $_____________.

    (e) The average issue price of the common stock was $______________.

    (f) Assuming that 25% of the treasury stock is sold at $20 per
    share, the balance in the Treasury Stock account would be
    $______________.

    3. Jenner Corporation's stockholders' equity section at December 31,
    2004 appears below:

    Stockholders' equity
    Paid-in capital
    Common stock, $10 par, 60,000 outstanding $600,000
    Paid-in capital in excess of par 150,000
    ????????
    Total paid-in capital $750,000
    Retained earnings 150,000
    ????????
    Total stockholders' equity $900,000

    On June 30, 2005, the board of directors of Jenner Corporation
    declared a 10% stock dividend, payable on July 31, 2005, to
    stockholders of record on July 15, 2005. The fair market value of
    Jenner Corporation's stock on June 30, 2005, was $15.

    On December 1, 2005, the board of directors declared a 2 for 1 stock
    split effective December 15, 2005. Jenner Corporation's stock was
    selling for $20 on December 1, 2005, before the stock split was
    declared. Par value of the stock was adjusted. Net income for 2005
    was $190,000 and there were no cash dividends declared.

    INSTRUCTIONS
    (a) Prepare the journal entries on the appropriate dates to record
    the stock dividend and the stock split.
    (b) Fill in the amount that would appear in the stockholders' equity
    section for Jenner Corporation at December 31, 2005, for the
    following items:

    1. Common stock $____________

    2. Number of shares outstanding ____________

    3. Par value per share $____________

    4. Paid-in capital in excess of par $____________

    5. Retained earnings $____________

    6. Total stockholders' equity $____________

    4. United Health is considering two alternatives for the financing of
    some high technology medical equipment. These two alternatives are:

    1. Issue 50,000 shares of $10 par value common stock at $50 per
    share.
    2. Issue $2,500,000, 10%, 10-year bonds at par.

    It is estimated that the company will earn $900,000 before interest
    and taxes as a result of acquiring the medical equipment. The
    company has an estimated tax rate of 30% and has 100,000 shares of
    common stock outstanding prior to the new financing.

    INSTRUCTIONS
    Determine the effect on net income and earnings per share for these
    two methods of financing.

    5. The following transactions were made by Waite Company. Assume all
    investments are short-term and are readily marketable.

    June 2 Purchased 200 shares of Abel Corporation common stock
    for $45 per share.

    July 1 Purchased 200 Lynn Corporation bonds for $220,000.

    30 Received a cash dividend of $2 per share from Abel
    Corporation.

    Sept. 15 Sold 60 shares of Abel Corporation stock for $50 per
    share.

    Dec. 31 Received semiannual interest check for $11,000 from Lynn
    Corporation.

    31 Received a cash dividend of $2 per share from Abel
    Corporation.

    INSTRUCTIONS
    Journalize the transactions.

    6. Stine Corporation's balance sheet at December 31, 2004, showed the
    following:

    Short-term investments, at fair value $46,500

    Stine Corporation's trading portfolio of stock investments consisted
    of the following at December 31, 2004:

    Stock Number of Shares Cost
    ????????????????????? ???????????????? ???????
    Craft Common Stock 200 $30,000
    Boone Preferred Stock 400 6,000
    Hale Common Stock 300 9,000
    ???????
    $45,000

    During 2005, the following transactions took place:

    Feb. 5 Sold 50 shares of Craft common stock for $9,000.
    Mar. 30 Purchased 25 shares of Hale common stock for $950.
    Sept. 9 Purchased 75 shares of Hale common stock for $2,000.

    At year end on December 31, 2005, the market values per share were:

    Market Value Per Share
    ??????????????????????
    Craft Common Stock $148.00
    Boone Preferred Stock $ 14.00
    Hale Common Stock $ 25.00

    INSTRUCTIONS
    (a) Prepare the journal entries to record the 2005 stock
    transactions.
    (b) On December 31, 2005, prepare any adjusting entry that might be
    necessary relative to the trading portfolio.
    (c) Show how the stock investments will appear on Stine
    Corporation's balance sheet at December 31, 2005.

    7. Pierce Company reported net income of $250,000 for the current year.
    Depreciation recorded on buildings and equipment amounted to $80,000
    for the year. Balances of the current asset and current liability
    accounts at the beginning and end of the year are as follows:

    End of Beginning of
    Year Year
    ??????? ????????????
    Cash $20,000 $15,000
    Accounts receivable 19,000 32,000
    Inventories 50,000 65,000
    Prepaid expenses 7,500 5,000
    Accounts payable 12,000 18,000
    Income taxes payable 1,600 1,200

    INSTRUCTIONS
    Prepare the cash flows from the operating activities section of the
    statement of cash flows using the indirect method.

    8. The comparative balance sheets for Kohl Company appear below:

    KOHL COMPANY
    Comparative Balance Sheet

    Dec. 31, Dec. 31,
    2005 2004
    ???????? ????????
    Assets
    ??????
    Cash $ 23,000 $12,000
    Accounts receivable 18,000 14,000
    Prepaid expenses 6,000 9,000
    Inventory 27,000 18,000
    Long-term investments -0- 18,000
    Equipment 60,000 30,000
    Accumulated depreciation??equipment (18,000) (14,000)
    ???????? ???????
    Total assets $116,000 $87,000

    Liabilities and Stockholders' Equity
    ????????????????????????????????????

    Accounts payable $ 21,000 $ 9,000
    Bonds payable 37,000 45,000
    Common stock 40,000 23,000
    Retained earnings 18,000 10,000
    ???????? ???????
    Total liabilities and stockholders' equity $116,000 $87,000

    Additional information:
    ??????????????????????
    1. Net income for the year ending December 31, 2005 was $20,000.
    2. Cash dividends of $12,000 were declared and paid during the year.
    3. Long-term investments that had a cost of $18,000 were sold for
    $16,000.
    4. Sales for 2005 were $120,000.

    INSTRUCTIONS
    Prepare a statement of cash flows for the year ended December 31,
    2005, using the indirect method.

    9. The comparative balance sheet of Ferry Company appears below:

    FERRY COMPANY
    Comparative Balance Sheet
    December 31,
    ????????????????????????????????????????????????????????????????????
    Assets 2005 2004
    ?????? ?????? ??????
    Current assets ......................... $ 322 $280
    Plant assets ........................... 678 520
    ?????? ????
    Total assets ......................... $1,000 $800

    Liabilities and stockholders' equity
    ????????????????????????????????????
    Current liabilities .................... $ 180 $120
    Long-term debt ......................... 240 160
    Common stock ........................... 320 320
    Retained earnings ...................... 260 200
    ?????? ????
    Total liabilities and
    stockholders' equity ................. $1,000 $800

    INSTRUCTIONS
    (a) Using horizontal analysis, show the percentage change for each
    balance sheet item using 2004 as a base year.
    (b) Using vertical analysis, prepare a common size comparative
    balance sheet.

    10. Operating data for Manning Corporation are presented below.

    2005
    ????????
    Net sales $500,000
    Cost of goods sold 320,000
    Operating expenses 120,000
    Net income 60,000

    INSTRUCTIONS
    Prepare a schedule showing a vertical analysis for 2005.

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    Journalize transactions for treasury stock for Walton Corporation is examined.

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