1)39 $1000 bonds with a carrying value of $48600 are converted into 4000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is
Bonds Payable | 48600 | |
Common Stock | 20000 | |
Paid-in Capital in Excess of Par | 28600 |
Bonds Payable | 48600 | |
Common Stock | 36000 | |
Paid-in Capital in Excess of Par | 12600 |
Bonds Payable | 39000 | |
Premium on Bonds Payable | 9600 | |
Common Stock | 20000 | |
Paid-in Capital in Excess of Par | 28600 |
Bonds Payable | 39000 | |
Premium on Bonds Payable | 9600 | |
Common Stock | 39000 | |
Paid-in Capital in Excess of Par | 9600 |
2)Coronado Corporation makes a short-term investment in 160
shares of Wildhorse Company’s common stock. The stock is purchased
for $53 a share. The entry for the purchase is
Stock Investments | 8480 | |
Cash | 8480 |
Stock Investments | 7987 | |
Cash | 7987 |
Stock Investments | 8000 | |
Cash | 8000 |
Debt Investments | 8480 | |
Cash | 8480 |
3)
Coronado, Inc. has 3500 shares of 4%, $50 par value, cumulative
preferred stock and 70000 shares of $1 par value common stock
outstanding at December 31, 2019. The board of directors declared
and paid a $2700 dividend in 2019. In 2020, $18900 of dividends are
declared and paid. What are the dividends received by the preferred
and common shareholders in 2020?
Preferred | Common |
$9450 | $9450 |
$11300 | $7600 |
$7600 | $11300 |
$7000 | $11900 |
4)
Marigold, Inc. has 11200 shares of 5%, $100 par value,
noncumulative preferred stock and 224000 shares of $1 par value
common stock outstanding at December 31, 2020. There were no
dividends declared in 2019. The board of directors declares and
pays a $64200 dividend in 2020. What is the amount of dividends
received by the common stockholders in 2020?
$0
$8200
$64200
$56000
(you dont need to show work just answer them)
When the carrying value of bond > the face value the bonds are issued at the premuim
as on date of conversion balance sheet would look like
Bonds Payable | $39,000 | ||
Add: premium on bonds payale | $9,600[48600-39000] | $48,600 | |
when bonds are converted bonds payable will be nil by debiting it and premium on bond payable will also be debited
common shares carries shares amount at par value
any amount higher than par value is credited to ppaid in capital in excess of par
common stock = 4000*$5=$20,000
Bonds Payable | 39000 | ||
Premium on Bonds Payable | 9600 | ||
Common Stock | 20000 | ||
Paid-in Capital in Excess of Par | 28,600 | [$39,000+9600-20000] | |
Answer C) |
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