Multiple Stock PurchasesâJournal Entries
Peck Company purchased Sanno Company common stock in a series ofopen-market cashpurchases from 2009 through 2011 as follows:
Date: Shares Acquired: Cost
Jan 1 , 2009 1800 46,000
Jan 1, 2010 4500 95,000
Jan 1 , 2011 9900 262,350
Sanno Company had 18,000 shares of 20 par value common stockoutstanding during the entire period. Retained earnings balancesfor Sanno Company on relevant dates were
Jan 1 2009 $20,000
Jan 1, 2010 (30,000)
Jan 1, 2011 85,000
Dec 31, 2011 170,000
Dividends in the amount of $50,000 were distributed by SannoCompany only in 2011. Any difference between implied and bookvalues assigned to good will. Peck company uses the cost method toaccount for its investment in Sanno Company,
Required:
A. Prepare journal entries that Peck company would record on itsbooks during 2011 to account for its investment in SannoCompany.
B. Prepare the workpaper elimiating entries necessary to preparea consildatted statement workpaper on Dec 31, 2011
Multiple Stock PurchasesâJournal Entries
Peck Company purchased Sanno Company common stock in a series ofopen-market cashpurchases from 2009 through 2011 as follows:
Date: Shares Acquired: Cost
Jan 1 , 2009 1800 46,000
Jan 1, 2010 4500 95,000
Jan 1 , 2011 9900 262,350
Sanno Company had 18,000 shares of 20 par value common stockoutstanding during the entire period. Retained earnings balancesfor Sanno Company on relevant dates were
Jan 1 2009 $20,000
Jan 1, 2010 (30,000)
Jan 1, 2011 85,000
Dec 31, 2011 170,000
Dividends in the amount of $50,000 were distributed by SannoCompany only in 2011. Any difference between implied and bookvalues assigned to good will. Peck company uses the cost method toaccount for its investment in Sanno Company,
Required:
A. Prepare journal entries that Peck company would record on itsbooks during 2011 to account for its investment in SannoCompany.
B. Prepare the workpaper elimiating entries necessary to preparea consildatted statement workpaper on Dec 31, 2011
Related questions
Exercise 4-3
Stockholdersâ equity in TransWorld Inc. on December 31, 2010, is shown below:
| Common stock: 60,000 authorized shares, par | $375,000 |
| Paid-in capital in excess of par value, common stock......................... | 90,000 |
| Retained earnings............................................................................. | 430,000 |
| Total equity....................................................................................... | 895,000 |
Stockholder equity accounts were affected by the following transactions in 2011:
| Jan 1 | TransWorld purchased 2,000 treasury shares at $24/share. |
| Jan 7 | Declared a $3/share dividend, payable on Feb 15 to the Feb 28 stockholders of record. |
| Feb 15 | Paid the dividend (Jan 7 declaration). |
| May 7 | Sold 800 of treasury shares for cash at $27/share. |
| Aug 15 | Sold 1200 of treasury shares for cash at $21/share. |
| Sep 20 | Declared a $3/share dividend, payable on Oct 15 to the Sep 30 stockholders of record. |
| Oct 15 | Paid the dividend (Sep 20 declaration). |
| Dec 31 | Closed the credit balance of $188,000 (from net income) in the Retained Earnings Income Summary account. |
1.Use the information provided to prepare the following:
a.Journal entries for the 2011 transactions.
b.December 31, 2011, retained earnings statement.
| TRANSWORLD INC Statement of Retained Earnings For Year Ended December 31, 2011 |
[Create your retained earnings statement here.]
c.For distinguished performance, prepare the investorsâ equity section of TransWorldâs December 31, 2011, balance sheet.
| TRANSWORLD INC Stockholdersâ Equity Section of the Balance Sheet December 31, 2011 |
[Create your balance sheet here.]
American Laser, Inc., reported the following account balances on January 1. Accounts Receivable $ 5,000 Accumulated Depreciation 30,000 Additional Paid-in Capital 90,000 Allowance for Doubtful Accounts 2,000 Bonds Payable 0 Buildings 247,000 Cash 10,000 Common Stock, 10,000 shares of $1 par 10,000 Notes Payable (long-term) 10,000 Retained Earnings 120,000 Treasury Stock 0 The company entered into the following transactions during the year. Jan. 15 Issued 5,000 shares of $1 par common stock for $50,000 cash. Feb. 15 Reacquired 3,000 shares of $1 par common stock into treasury for $33,000 cash. Mar. 15 Reissued 2,000 shares of treasury stock for $24,000 cash. Aug. 15 Reissued 600 shares of treasury stock for $4,600 cash. Sept. 15 Declared (but did not yet pay) a $1 cash dividend on each outstanding share of common stock. Oct. 1 Issued 100, 10-year, $1,000 bonds, at a quoted bond price of 101. Oct. 3 Wrote off a $500 balance due from a customer who went bankrupt.
Prepare the journal entries to record each transaction. Review the accounts as shown in the General Ledger and Trial Balance tabs. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
1
Issued 5,000 shares of $1 par common stock for $50,000 cash. Record the transaction.
2
Reacquired 3,000 shares of $1 par common stock into treasury for $33,000 cash. Record the transaction.
3
Reissued 2,000 shares of treasury stock for $24,000 cash. Record the transaction.
4
Reissued 600 shares of treasury stock for $4,600 cash. Record the transaction.
5
Declared (but did not yet pay) a $1 cash dividend on each outstanding share of common stock. Record the transaction.
6
Issued 100, 10-year, $1,000 bonds, at a quoted bond price of 101. Record the transaction.
7
Wrote off a $500 balance due from a customer who went bankrupt. Record the transaction.
8
Prepare the closing entry for Dividends. Record the transaction.
Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted, adjusted, or post-closing balances.
UnadjustedPost-closing Unadjusted
Unadjusted
Post-closing
Dates:Jan 01
Jan 01
Jan 31
Jan 01
Jan 31
Jan 15
Jan 31
Feb 15
Feb 28
Mar 15
Mar 31
Aug 15
Aug 31
Sep 15
Sep 30
Oct 01
Oct 03
Oct 31
to:Oct 03
Jan 01
Jan 31
Jan 01
Jan 31
Jan 15
Jan 31
Feb 15
Feb 28
Mar 15
Mar 31
Aug 15
Aug 31
Sep 15
Sep 30
Oct 01
Oct 03
Oct 31
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