Selected transactions completed by Delhome Products Inc. during the fiscal year ending July 31, 2008, were as

Question:

Selected transactions completed by Delhome Products Inc. during the fiscal year ending July 31, 2008, were as follows:

a. Issued 12,500 shares of $\$ 30$ par common stock at $\$ 65$, receiving cash.

b. Issued 10,000 shares of $\$ 125$ par preferred $8 \%$ stock at $\$ 160$, receiving cash.

c. Issued $\$ 15,000,000$ of 10 -year, $12 \%$ bonds at an effective interest rate of $10 \%$, with interest payable semiannually. Use the present value tables in Appendix A to determine the bond proceeds. (Round to the nearest dollar.)

d. Declared a dividend of $\$ 0.25$ per share on common stock and $\$ 2.50$ per share on preferred stock. On the date of record, 125,000 shares of common stock were outstanding, no treasury shares were held, and 18,750 shares of preferred stock were outstanding.

e. Paid the cash dividends declared in (d).

f. Redeemed $\$ 500,000$ of eight-year, $15 \%$ bonds at 101 . The balance in the bond premium account is $\$ 6,150$ after the payment of interest and amortization of premium have been recorded. (Record only the redemption of the bonds payable.)

g. Purchased 6,250 shares of treasury common stock at $\$ 62.50$ per share.

h. Declared a $2 \%$ stock dividend on common stock and a $\$ 2.50$ cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $\$ 63.75$ per share. On the date of record, 125,000 shares of common stock had been issued, 6,250 shares of treasury common stock were held, and 18,750 shares of preferred stock had been issued. (Round to the nearest dollar.)

i. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders.

j. Purchased $\$ 150,000$ of Lewis Sports Inc. 10 -year, $15 \%$ bonds, directly from the issuing company, for $\$ 145,500$ plus accrued interest of $\$ 5,625$.

k. Sold, at $\$ 72.50$ per share, 3,750 shares of treasury common stock purchased in $(\mathrm{g})$.

1. Recorded the payment of semiannual interest on the bonds issued in

(c) and the amortization of the premium for six months. The amortization was determined using the straight-line method. (Round the amortization to the nearest dollar.)

$\mathrm{m}$. Accrued interest for four months on the Lewis Sports Inc. bonds purchased in (j). Also recorded amortization of $\$ 120$.

{Instructions}

1. Journalize the selected transactions.

2. After all of the transactions for the year ended July 31, 2008, had been posted [including the transactions recorded in (1) and all adjusting entries], the data below and on the following page were taken from the records of Delhome Products Inc.

a. Prepare a multiple-step income statement for the year ended July 31, 2008, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 125,000 and preferred dividends were $\$ 131,250$. (Round earnings per share to the nearest cent.)

b. Prepare a retained earnings statement for the year ended July 31, 2008.

c. Prepare a balance sheet in report form as of July 31, 2008.objs. 2, 3 image text in transcribed