Exercise #1

The Norman Corporation's stockholders' equity accounts have the following balances as of January 1, 2016:

Common stock, $10 par (60,000 shares issued and outstanding)

$ 600,000

Additional paid-in capital: common

1,500,000

Retained earnings

1,200,000

Total stockholders' equity

$3,300,000

Norman engaged in the following dividend transactions during 2016:

March 1:

Declared a 50% stock dividend on the common stock, distributable on April 10. The market price per share for the common stock was $35 on March 1.

April 10:

Distributed the stock dividend declared on March 1.

Required:

Prepare the entries to record the dividend transactions for 2016. (Do not record the cash dividend payment in 2017.)

Excercise #2

ISSUANCE OF A BOND

Determine the selling price (present value) of the following bonds and make the journal entry to record the issue of each bond.

1. A $ 10,000 five-year bond is sold at 11% when the interest rate is 12%. The bond pays interest semi-annually.