1) Milliken Incorporated is formed with an authorization of 1,000,000 shares. The board of directors sets par value at 1.00 per share. Milliken sells 100,000 shares for 10.00 per share on 02/01/05. (25 points)

Record

Date Description Debit Credit

Milliken sells another 100,000 shares for cash to the board of directors at par.

Record

Date Description Debit Credit

Milliken hires you as a financial consultant. They want you to advise them on several issues. They are:

1. Would you recommend the sale of another 900,000 shares at a price of 15.00 per share if the market price has risen to that price? Why? Why not?
2. What is additional paid in capital.
3. Whatistotal paidincapital?

2) The corporate charter of Sunner Corporation allows the issuance of a maximum of 3,000,000 shares of $1 par value common stock. During its first three years of operation, Sunner issued 1,560,000 shares at $15 per share. It later acquired 60,000 of these shares as treasury stock for $25 per share.

Instructions (10 points)

Based on the above information, answer the following questions:

(a) How many shares were authorized?

(b) How many shares were issued?

(c) How many shares are outstanding?

(d) What is the balance of the Common Stock account?

(e) What is the balance of the Treasury Stock account?

Using the tables in the book compute the market price of a bond under the following conditions: (10 Points)

1. 1,000,000 bond issued on January 1, 2016
2. 5 year maturity
3. 10 percent contract interest rate
4. 11 percent market interest rate
5. Semi annual payments

Record the repayment of the bonds on the date of maturity January 1 2021.

Date Description Debit Credit