Exercise 11-3B Effect of accounting events on the financial statements of a partnership LO 11-1 D. Reed and J. Files started the RF partnership on January 1, Year 1. The business acquired $70,000 cash from Reed and $140,000 from Files. During Year 1, the partnership earned $75,000 in cash reve nues and paid $39,000 for cash expenses. Reed withdrew $2,000 cash from the business, and Files withdrew $4,000 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business. Required Prepare an income statement, capital statement, balance sheet, and statement of cash flows for the RF partnership for the Year 1 fiscal year. RF Partnership Financial Statements Income Statement Capital Statement EXERCISE 11-3B (cont.) RF Partnership Financial Statements Balance Sheet Statement of Cash Flows Exercise 11-4B Capital stock authorized, issued, and outstanding LO 11-2 Bronson Inc. has 300,000 shares authorized, 175,000 shares issued, and 25,000 shares of treasury stock. At this point, Bronson has $820,000 of assets. $250,000 liabilities, $400,000 of common stock, and $170,000 of retained earnings. Further, assume that the market value of Bronson's common stock is $6 per share. Required Determine the number of shares of stock that is outstanding Determine the book value per share. Provide a rational explanation for the difference between the book value per share and the market value per share of Bronson Inc. common stock. a. b. c. a. Shares outstanding = b. Book value per share G. The stockholders' equity section of Creighton Company's balance sheet is shown as follows: CREIGHTON COMPANY As of December 31, Year 3 Stockholders' equity Preferred stock, $6 stated value, 6 % cumulative, 250 shares authorized, 100 issued and outstanding Common stock, $6 par value, 200 shares authorized, 150 Issued and outstanding Common stock, class B, $8 par value, 450 shares authorized, 100 issued and outstanding Common stock, no par, 200 shares authorized 150 issued and outstanding Paid-in capital in excess of stated value-preferred Paid-in capital in excess of par value--common 600 900 800 1,800 400 900 800 Paid-in capital in excess of par value-class B common Retained earnings 9,000 $15,200 Total stockholders' equity Required a. Assuming the preferred stock was originally issued for cash, determine the amount of cash that was collected when the stock was issued Based on the class B common stock alone, determine the amount of the company's legal capital b. c. Based on the class B common stock alone, determine the minimum amount of assets that must be retained in the company as protection for creditors d. Determine the number of shares of class B common stock that are available to sell as of Decem ber 31, Year 3 e. Assuming Creighton purchases treasury stock consisting of 50 shares of its no par common stock on January 1, Year 4, determine the amount of the no-par common stock that would be outstanding immediately after the purchase. f. Based on the stockholders' equity section shown earlier. can you determine the market value of the preferred stock? If yes, what is the market value of one share of this stock? Exercise 11-3B Effect of accounting events on the financial statements of a partnership LO 11-1 D. Reed and J. Files started the RF partnership on January 1, Year 1. The business acquired $70,000 cash from Reed and $140,000 from Files. During Year 1, the partnership earned $75,000 in cash reve nues and paid $39,000 for cash expenses. Reed withdrew $2,000 cash from the business, and Files withdrew $4,000 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business. Required Prepare an income statement, capital statement, balance sheet, and statement of cash flows for the RF partnership for the Year 1 fiscal year. RF Partnership Financial Statements Income Statement Capital Statement EXERCISE 11-3B (cont.) RF Partnership Financial Statements Balance Sheet Statement of Cash Flows Exercise 11-4B Capital stock authorized, issued, and outstanding LO 11-2 Bronson Inc. has 300,000 shares authorized, 175,000 shares issued, and 25,000 shares of treasury stock. At this point, Bronson has $820,000 of assets. $250,000 liabilities, $400,000 of common stock, and $170,000 of retained earnings. Further, assume that the market value of Bronson's common stock is $6 per share. Required Determine the number of shares of stock that is outstanding Determine the book value per share. Provide a rational explanation for the difference between the book value per share and the market value per share of Bronson Inc. common stock. a. b. c. a. Shares outstanding = b. Book value per share G. The stockholders' equity section of Creighton Company's balance sheet is shown as follows: CREIGHTON COMPANY As of December 31, Year 3 Stockholders' equity Preferred stock, $6 stated value, 6 % cumulative, 250 shares authorized, 100 issued and outstanding Common stock, $6 par value, 200 shares authorized, 150 Issued and outstanding Common stock, class B, $8 par value, 450 shares authorized, 100 issued and outstanding Common stock, no par, 200 shares authorized 150 issued and outstanding Paid-in capital in excess of stated value-preferred Paid-in capital in excess of par value--common 600 900 800 1,800 400 900 800 Paid-in capital in excess of par value-class B common Retained earnings 9,000 $15,200 Total stockholders' equity Required a. Assuming the preferred stock was originally issued for cash, determine the amount of cash that was collected when the stock was issued Based on the class B common stock alone, determine the amount of the company's legal capital b. c. Based on the class B common stock alone, determine the minimum amount of assets that must be retained in the company as protection for creditors d. Determine the number of shares of class B common stock that are available to sell as of Decem ber 31, Year 3 e. Assuming Creighton purchases treasury stock consisting of 50 shares of its no par common stock on January 1, Year 4, determine the amount of the no-par common stock that would be outstanding immediately after the purchase. f. Based on the stockholders' equity section shown earlier. can you determine the market value of the preferred stock? If yes, what is the market value of one share of this stock