Dcomprehensiveexam d

8/18/2019 Dcomprehensiveexam d

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COMPREHENSIVE EXAMINATION D

PART 4

(Chapters 15-17)

Appro!"ate

Pro#$e" Top!% T!"eD-I Treasury Stock. 20 min.D-II *Cash Dividends. 10 min.D-III Stock Dividends and Stock Splits. 10 min.D-IV arnin!s "er Share Concepts. 10 min.D-V arnin!s "er Share Computations. 10 min.D-VI #asic and Diluted arnin!s "er Share. 20 min.

D-VII $vaila%le-&or-Sale 'uity Securities. 1( min.D-VIII Tradin! Securities. )0 min.

12( min.

*"art o& this topic is dealt ith in an $ppendi+ to the chapter.

Pro#$e" D-I , Treasury Stock

The stockholders e'uity section o& Carey Co.s %alance sheet at Decem%er )2012 as as &ollos/

Common stock--10 par authoried 1000000 sharesissued and outstandin! 300000 shares4 3000000

"aid-in capital in e+cess o& par 1(000005etained earnin!s )2(0000

106(0000

I&str'%t!o&s

"repare 7ournal entries 1 2 and 84 and sho proper disclosure )4 to re&lehe &olloin! treasury stock transactions shoin! ho each is accounted &

under the cost method. Sho computations.4


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Test Bank for Intermediate Accounting, Fourteenth Edition

1. 9n :anuary 8 201) havin! idle cash Carey Co. repurchased 20000 sharo& its out-standin! stock &or (00000.

2. 9n ;arch 8 Carey sold (000 o& these reac'uired shares at 2< per share.

). Sho the proper disclosures in the stockholders e'uity section o& the %alansheet issued at the end o& the &irst 'uarter ;arch )1 201). $ssume nincome o& 100000 durin! the &irst 'uarter.

8. 9n :une )0 201) the &irm sold 10000 o& the reac'uired shares &or 21 pshare.

Pro#$e" D-II , Cash Dividends

#ell Company has stock outstandin! as &ollos/ Common 10 par value pshare 180000 shares= "re&erred (>= 100 par value per share


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Comprehensive Examination D

. $pplies to stock splits e&&ected in the &orm o& a dividend only.@. $pplies to %oth stock splits e&&ected in the &orm o& a dividend and a stockdividend.

In each instance the issuin! company has only one class o& stock.4

I&str'%t!o&s

"rint ne+t to the num%er o& each statement %elo the sin!le capital letter o& tdescription hich applies to the statement.

Statements

AAAA 1. The distri%ution is a multiple as contrasted to a &raction o& the num%o& shares previously outstandin!.

AAAA 2. The total num%er o& shares outstandin! is increased.

AAAA ). The individual stockholders share o& net assets is increased.

AAAA 8. There is no trans&er %eteen retained earnin!s and capital stoaccounts other than to the e+tent occasioned %y le!al re'uirements.

AAAA (. There is no chan!e in the total stockholders e'uity o& the issuicorporation.

AAAA 3. The retained earnin!s availa%le &or dividends are increased.

AAAA 6. 5etained earnin!s in the amount o& the distri%ution are trans&erred capital stock in some instances in an amount in e+cess o& that re'uir %y the las o& the state o& incorporation.

AAAA


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AAAA B. The par or stated value4 o& the stock is unchan!ed.

Pro#$e" D-IV , arnin!s "er Share Concepts

Indicate hich o& the &olloin! securities ould %e included in tcomputation o& %asic earnin!s per share and hich ould %e included in tcomputation o& diluted earnin!s per share. "lace a # %e&ore those hia&&ect only %asic "S a D %e&ore those hich a&&ect only diluted "S#D %e&ore those hich a&&ect %oth %asic and diluted "S and an %e&o

hose securities hich do not a&&ect "S computations. $ssume that heapplica%le the appropriate securities are dilutive.AAAA 1. Earrants to purchase additional common shares.

AAAA 2. Common stock.

AAAA ). onconverti%le de%enture %onds.

AAAA 8. Converti%le noncumulative pre&erred stock.

AAAA (. Cumulative nonconverti%le pre&erred stock.

AAAA 3. Converti%le %onds.

AAAA 6. +ecutive stock options.

AAAA ta+ rate4 o& 1200000 &or 201) and avera!e num%er o& shares outstandin! durin! the year o& (00000 shares. Tcorporation issued 2000000 par value o& 10-year B> converti%le %onds

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:anuary 1 2011 at a 1 ta+ rate4 )000000

$vera!e common shares outstandin! 201)1000000 shares10> cumulative converti%le pre&erred stock/Converti%le into


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"repare necessary 7ournal entries on the %ooks o& orin Company &or t&olloin! transactions. I& no entry is re'uired rite none in the spaprovided. 5ound all calculations to the nearest cent.4

a4 :anuary 2 2012/ orin purchases the shares descri%ed a%ove.

%4 Decem%er )1 2012/ orin receives a .6( per share dividend &rom 9sand 9slo announces a net income &or 2012 o& 2(0000.

c4 Decem%er )1 2012/ $ccordin! to The Wall Street Journal 9slo commonsellin! &or 26 per share. orins mana!ement vies this decline as %eionly temporary in nature. 9slos common is orins only availa%le-&osale security.

d4 @e%ruary 1( 201)/ orin sells (00 o& the shares purchased on :anuary2012 at )2 per share.

Pro#$e" D-VIII , Tradin! Securities

The in&ormation %elo relates to ;ilton Companys tradin! securities in 2012and 201).

a4 "repare the 7ournal entries &or the &olloin! transactions.

:anuary 1 2012 "urchased )00000 par value o& FG@ Company %ondsB6 plus accrued interest. The %onds pay interest annually at B

each Decem%er )1. #rokers commission as )000.

Septem%er 1 2012 Sold 1(0000 par value o& FG@ Company %onds at B8 paccrued interest. #rokers commission ta+es and &ees e1(00.

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Septem%er ( 2012 "urchased (000 shares o& Hayes Inc. common stock &)0 per share. The %rokers commission on the purchaamounted to 2000.

Decem%er )1 2012 ;ake the appropriate entry &or the FG@ Company %onds.

Decem%er )1 2012 The market prices o& the tradin! securities at Decem%er ere/ Hayes Inc. common stock )1 per share= and FCompany %onds BB. ;ake the appropriate entry.

:uly 1 201) ;ilton sold 12 o& the Hayes Inc. common stock at )2 pshare. #rokers commissions ta+es and &ees ere 1000.

Decem%er 1 201) ;ilton purchased 300 shares o& 5amire Inc. commstock at 8( per share. #rokers commission as (00.

Decem%er )1 201) ;ake the appropriate entry &or the FG@ Company %onds.

Decem%er )1 201) The market prices o& the tradin! securities at Decem%er ere/ Hayes Inc. common stock )8 per share= FG@ Compa %onds B


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So$'t!o&s Co"prehe&s!*e Ea"!&at!o& D

Pro#$e" D-I , Solution.

1. Treasury Stock ..............................................(00000Cash ....................................................... (00000

2. Cash ...............................................................180000Treasury Stock ...................................... 12(000"aid-in Capital &rom Treasury Stock ..... 1(000

). Stockholders e'uity/Common stock 10 par 1000000 shares authoried300000 shares issued (


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"re&erred Common Total$rrears, J 2 * 13000 28000 80000

1)3000 B80002)0000

* K2)0000 L 1B00004 M 300000 N 18000004O

Pro#$e" D-III , Solution.

1. C 8. 6. @2. $ (. $


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a4 #asic "S P,,,,,,,,,,, P 2.0B1(00000

%4 Shares arnin!sStart 1(00000 )180000Converti%le pre&erred


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Pro#$e" D-VIII , Solution.

:anuary 1 2012*De%t Investments )00000 J.B64 N )000 ....2B8000

Cash ........................................................... 2B8000Septem%er 1 2012Cash 181000 N B000 L 1(004 ..................18


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@air Value $d7ustment Tradin!4....................... 18200Qnrealied Holdin! Fain or Goss,Income 18200 )23(00 L )8(2004 - 8(00

Decem%er )1#alance Sheet 2012 201)Current assets/

'uity Investments at &air value )0)(00 )8(200

Income Statement9ther revenue and !ains/

Interest 5evenue 1)(00 1)(00Qnrealied holdin! !ain on tradin! securities8(00 18200Fain on sale o& securities )000

9ther e+penses and losses/Goss on sale o& securities 6(00

D - #2

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