JOURNALIZE THE TRANSACTIONS AND THE CLOSING ENTRY FOR NET INCOME.

Due Week 8 and worth 70 points

Directions: Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in Blackboard.

Exercises

E11-7. Quay Co. had the following transactions during the current period.

Mar. 2 Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for $30,000 for services performed in helping the company to incorporate.
June 12 Issued 60,000 shares of $5 par value common stock for cash of $375,000.
July 11 Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share.
Nov. 28 Purchased 2,000 shares of treasury stock for $80,000.

Instructions
Journalize the transactions.

E11-13. On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr. 1 Issued 25,000 additional shares of common stock for $17 per share.
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 Paid the $1 cash dividend.
Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.
15 Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of record on December 31.

Instructions
a) Prepare the entries, if any, on each of the three dividend dates.
b) How are dividends and dividends payable reported in the financial statements prepared at December 31?

E12-8. Presented below are two independent situations.

1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.
2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.

Instructions
Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.

E12-12. Uttinger Company has the following data at December 31, 2015.

The available-for-sale securities are held as a long-term investment.

Instructions
a) Prepare the adjusting entries to report each class of securities at fair value.
b) Indicate the statement presentation of each class of securities and the related unrealized gain (loss) accounts.

Problems

P11-3A. The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as follows.
Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized) $ 400,000
Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par—Preferred Stock 100,000
Paid-in Capital in Excess of Stated Value—Common Stock 1,450,000
Retained Earnings 1,816,000
Treasury Stock (10,000 common shares) 50,000

During 2015, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb. 1 Issued 25,000 shares of common stock for $120,000.
Apr. 14 Sold 6,000 shares of treasury stock—common for $33,000.
Sept. 3 Issued 5,000 shares of common stock for a patent valued at $35,000.
Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31 Determined that net income for the year was $452,000.
No dividends were declared during the year.

Instructions
a) Journalize the transactions and the closing entry for net income.
b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J5 for the posting reference.)
c) Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of the preferred dividends in arrears.

P12-6A. The following data, presented in alphabetical order, are taken from the records of Nieto Corporation.

The investment in Sasse common stock is considered to be a long-term available-for-sale security.

Instructions
Prepare a classified balance sheet at December 31, 2015.