Allocate cash dividends to preferred and common stock.

(LO 1)

Journalize stock dividends.

(LO 2)

Compare effects of a stock dividend and a stock split.

(LO 2)

E14-2Knudsen Corporation was organized on January 1, 2016. During its first year, the corporation issued 2,000 shares of $50 par value preferred stock and 100,000 shares of $10 par value common stock. At December 31, the company declared the following cash divi- dends: 2016, $5,000; 2017, $12,000; and 2018, $28,000.

Instructions

1. (a)Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and noncumulative.
2. (b)Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and cumulative.
3. (c)Journalize the declaration of the cash dividend at December 31, 2018, under part (b).

AND

P14-1AOn January 1, 2017, Geffrey Corporation had the following stockholders' equity accounts.

Prepare dividend entries and stockholders' equity section.

(LO 1, 2, 3)

Common Stock ($20 par value, 60,000 shares issued and outstanding)

Paid-in Capital in Excess of ParCommon Stock Retained Earnings

$1,200,000 200,000 600,000

AND

E15-5Swisher Company issued $2,000,000 of bonds on January 1, 2017.

Instructions

1. (a)Prepare the journal entry to record the issuance of the bonds if they are issued at (1) 100, (2) 98, and (3) 103.
2. (b)Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100.
3. (c)Prepare the journal entry to record the redemption of the bonds before maturity at 98. Assume the balance in Premium on Bonds Payable is $9,000.
4. (d)Prepare the journal entry to record the conversion of the bonds into 60,000 shares of $10 par value common stock. Assume the bonds were issued at par.

Prepare entries for issuance, redemption, and conversion of bonds.

(LO 2)

AND

P15-5APresented below are three different lease transactions that occurred for Ruggiero Inc. in 2017. Assume that all lease contracts start on January 1, 2017. In no case does Rug- giero receive title to the properties leased during or at the end of the lease term.

Analyze three different lease situations and prepare journal entries.

(LO 4)

Type of property

Yearly rental

Lease term

Estimated economic life Fair value of lease asset Present value of the lease

rental payments Bargain purchase option

Instructions

Judson Delivery

Computer $ 5,000 6 years 7 years $27,500

$26,000 None

Lessor Hester Co.

Delivery equipment $ 4,200

4 years

7 years $19,000

$13,000 None

Gunselman Auto

Automobile $ 3,700

2 years

5 years $11,000

$ 6,400 None

1. (a)Which of the leases are operating leases and which are capital leases? Explain.
2. (b)How should the lease transaction for Hester Co. be recorded in 2017?
3. (c)How should the lease transaction for Judson Delivery be recorded on January 1,
4. 2017?