Complete the following requirements for each independent case. Case A: The charter for Rogers, Incorporated, authorized the

Question:

Complete the following requirements for each independent case.

Case A: The charter for Rogers, Incorporated, authorized the following capital stock:

Common stock, par $10, 103,000 shares

Preferred stock, 9 percent, par value $8 per share, 4,000 shares

The company sold 40,000 shares of common stock and 3,000 shares of preferred stock. During 2011, the following selected transactions were completed in the order given:

1. Rogers declared and paid dividends in the amount of $10,000. How much was paid to the holders of preferred stock? How much was paid to the common stockholders?

2. Rogers purchased 5,000 shares for treasury stock. After this transaction, how many shares of common stock were outstanding?

3. Describe the financial statement effects if Rogers sold 1,000 shares of treasury stock for $5 more than it paid.

4. Describe the financial statement effects if Rogers declared and issued a 2-for-1 stock split.

Case B: Ospry, Inc., has a quick ratio of 0.50 and working capital in the amount of $960,000. For each of the following transactions, determine whether the quick ratio and working capital will increase, decrease, or remain the same.

1. Paid accounts payable in the amount of $10,000.

2. Recorded rent payable in the amount of $22,000.

3. Collected $5,000 in accounts receivable.

4. Purchased $20,000 of new inventory for cash.

Case C: James Corporation is planning to issue $1,000,000 worth of bonds that mature in 10 years and pay 5 percent interest each December 31. All of the bonds will be sold on January 1, 2011.

Required:

Compute the issue (sale) price on January 1, 2011, for each of the following independent cases (show computations):

1. Market (yield) rate, 5 percent.

2. Market (yield) rate, 4 percent.

3. Market (yield) rate, 6 percent.

Case D: Miller Enterprises is a national chain of upscale bicycle shops. The company has followed a successful strategy of locating near major universities. Miller has the opportunity to expand into several new markets but must raise additional capital. The company has engaged in the following transactions:

■ Issued 45,000 additional shares of common stock. The stock has a par value of $1 and sells in the market for $25 per share.

■ Issued bonds. These bonds have a face value of $1,000,000 and mature in 10 years. The bonds pay 10 percent interest, semiannually. The current market rate of interest is 8 percent.

Required:

1. Record the sale of the bonds.

2. Record the issuance of the stock.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...