Chapter 10

A note payable for $100,000 due in 2 years Non-Current

A 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments Current
Interest payable of $12,000 on the mortgage. Current
Accounts Payable of $60,000 Current
Wichita University sells 4,260 season basketball tickets at $157 each for its 10-game home schedule.
Give the entry to record (a) the sale of the season tickets and (b) the revenue recognized for playing the first home game
a) Cash 668820
Unearned Ticket Revenue 668820
b) Unearned Ticket Revenue 66882
Ticket Revenue 66882

Becky Company borrows $112,000 on July 1 from the bank by signing a $112,000, 8%, one-year note payable.
(a) Prepare the journal entry to record the proceeds of the note.
(b) Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year

July 1 Cash 112000
Notes Payable 112000
Dec 31 Interest Expense 4480
Interest Payable 4480

Shaffer Inc. is considering two alternatives to finance its construction of a new $1.30 million plant.
(a) Issuance of 130,000 shares of common stock at the market price of $10 per share.
(b) Issuance of $1,300,000, 6% bonds at face value.
Complete the following table, and indicate which alternative is preferable.
Income before interest and taxes 772,600 772,600
Interest expense from bonds 0 78000
Income before income taxes

772600 694600
Income tax expense (35%)

270410 243110
Net Income

502190 451490
Outstanding Shares

772600 642600
Earnings per Share 0.65 0.70

Quincey Corporation issued 2,790, 9%, 5-year, $1,000 bonds dated January 1, 2014, at 100.
(a) Prepare the journal entry to record the sale of these bonds on January 1, 2014.
(b) Prepare the journal entry to record the first interest payment on July 1, 2014 (interest payable semiannually), assuming no
previous accrual of interest.
(c) Prepare the adjusting journal entry on December 31, 2014, to record interest expense.

Jan 1 Cash 2790000
Bonds Payable 2790000
July 1 Interest Expense 125550
Cash 125550
Dec 31 Interest Expense 125550
Interest Payable 125550

Sandstone Company issues $2,400,000, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.
(a) Prepare the journal entry to record the sale of these bonds on January 1, 2014.
(b) Assuming instead that the above bonds sold for 105, prepare the journal entry to record the sale of these bonds on January 1,
2014.

a) Jan 1 Cash
Discount on Bonds Payable
Bonds Payable
b) Jan 1 Cash
Premium on Bonds Payable
Bonds Payable

Carrolla Company has issued three different bonds during 2014. Interest is payable semiannually on each of these bonds.
1. On January 1, 2014, 1,170, 8%, 5-year, $1,200 bonds dated January 1, 2014, were issued at face value.
2. On July 1, $763,600, 9%, 5-year bonds dated July 1, 2014, were issued at 103.
3. On September 1, $128,400, 7%, 5-year bonds dated September 1, 2014, were issued at 97.

Jan 1 Cash 1404000
Bonds Payable 1404000
July 1 Cash 786805
Premium on Bonds Payable 22908
Bonds Payable 763600
Sept 1 Cash 124548
Discount on Bonds Payable 3852
Bonds Payable 128400

The balance sheet for Prism Consulting reports the following information on July 1, 2014.
Long-term liabilities
Bonds Payable 1,960,000
Less: Discount on bonds payable 117,000 1,842,000

Bonds Payable 1,960,000
Loss on Bond Redemption 196,000
Discount on Bonds Payable 117,600
Cash 2,038,400
Presented below are long-term liability items for Suarez Company at December 31, 2014.
Bonds payable, due 2016 405,000
Lease liability 70,330
Notes payable, due 2019 73,960
Discount on bonds payable 24,300

Long-term Liabilities
Bonds Payable 405000
Less: Discount on Bonds Payable 24300 380700
Notes Payable 73960
Lease Liability 70330
Total Long-term Liabilities 524990

Chapter 11
On May 10, Chen Corporation issues 2,200 shares of $7 par value common stock for cash at $16 per share.
Cash 35200
Common Stock 15400
Paid-in capital in Excess Par-Common Stock 19800

Alou Inc.s $10 par value common stock is actively traded at a market price of $15 per share. Alou issues 5,300 shares to purchase land advertised
for sale at $86,940.
Land 79500
Common Stock 53000
Paid-in Capital in Excess Par-Common Stock 26500

On July 1, Naperville Corporation purchases 580 shares of its $5 par value common stock for the treasury at a cash price of $8 per share. On
September 1, it sells 290 shares of the treasury stock for cash at $12 per share.
July 1 Treasury Stock 4640
Cash 4640
Sept 1 Cash 3480
Treasury Stock 2320
Paid-in Capital from Treasury Stock 1160

Chard Inc. issues 4,070 shares of $100 par value preferred stock for cash at $130 per share.
Cash 529100
Preferred Stock 407000
Paid-in Capital in Excess of Par-Preferred Stock 122100

Fields Corporation has 82,710 shares of common stock outstanding. It declares a $2 per share cash dividend on November 1 to stockholders of record
on December 1. The dividend is paid on December 31.

Cash Dividends 165420
Dividends Payable 165420
Dividends Payable 165420
Cash 165420

Valiant Corporation has 47,300 shares of $10 par value common stock outstanding. It declares a 10% stock dividend on December 1 when the market
price per share is $16. The dividend shares are issued on December 31.

Dec 1 Stock Dividends 75680
Common Stock Dividends Distributable 47300
Paid-in Capital in Excess of Par-Common Stock 28380
Dec 31 Common Stock Dividends Distributable 47300
Common Stock 47300

For the year ending December 31, 2014, Abbott Inc. reports net income $134,910 and dividends $55,980.

Retained Earnings Jan 1 226220
Add: Net Income 134910
361130
Less: Dividends 55980
Retained Earnings Dec 31 305150


The balance sheet for Lauren Inc. shows the following: total paid-in capital and retained earnings $866,900, total stockholders equity
$800,000, common stock issued 48,000 shares, and common stock outstanding 31,000 shares. Compute the book value per share. (No preferred stock
is outstanding.
Book value per share = 25.81

AHAB CORPORATION
Balance Sheet (partial)
Paid-in capital

Preferred stock, cumulative, 11,400 shares authorized, 6,000 shares issued and outstanding

$360,000

Common stock, no par, 753,300 shares authorized, 599,900 shares issued

1,799,700
Total paid-in capital

2,159,700

Retained earnings

1,704,600
Total paid-in capital and retained earnings

3,864,300

Less: Treasury stock (70,500 common shares)

(70,500 )
Total stockholders equity

$3,793,800

Answer the following questions.

(a) How many shares of common stock are outstanding
529400

(b) Assuming there is a stated value, what is the stated value of the common stock?
3

(c) What is the par value of the preferred stock?
$ 60

(d) If the annual dividend on preferred stock is $36,000, what is the dividend rate on preferred stock
$ 10 %

(e) If dividends of $72,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?
1632600