For this , omit all general journal entry explanations.

Ensure to include correct dollar signs, underlines & double underlines.

Question 1: 20 points

Part A.

On January 1, 2014, Flip Corporation had 560,000 shares of $1 par value common stock issued and outstanding. There was a $3,000,000 balance in the Retained Earnings account at the beginning of the year. During the first quarter of the year, the following transactions occurred:

Jan. 8	Issued 40,000 shares of its own common stock for $400,000.
Jan. 18	Declared a cash dividend of $1 per share to stockholders of record on Jan. 10.
Jan. 31	Paid the $1 cash dividend declared on Jan. 18.
Feb. 2	Purchased 3,000 shares of its own common stock for the treasury at $11 per share.
Feb. 14	Sold 2,000 shares of the treasury stock purchased on Feb. 2 for $12 per share.
March 25	Declared a 2 for 1 stock split on outstanding shares.

Instructions

Prepare journal entries to record the above transactions.

Part B.

The following information is available for Flip Corporation for the year ended December 31, 2014:

Beginning retained earnings $ 340,000

Cost of goods sold 620,000

Declared cash dividends 50,000

Operating expenses 170,000

Other expenses and losses 40,000

Other revenues and gains 60,000

Sales 1,000,000

Tax rate 30%

Instructions:

1. Prepare a corporate income statement in good form.

2. Prepare a retained earnings statement for the year.

Question 2: 10 points:

January 1, 2014 Flip Company purchased 35,000 shares of common stock of Flop Corporation as a long-term investment for $900,000. December 31, 2014, Flop Corporation reported net income of $300,000 and paid dividends of $100,000.

Instructions:

a. Assuming that the 35,000 shares represent a 10% interest in Flop Corporation:

1. Prepare the journal entry to record the investment in Flop stock.

2. Prepare any entries that Flip Company should make in accounting for its investment in Flop stock during the year.

3. What is the balance of the Stock Investments account on Flip Company's books at the end of the year?

b. Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Flop Corporation.

Question 3: 15 points: The following information is available for Flip Corporation for the year ended December 31, 2014:

Collection of principal on long-term loan to a supplier $15,000

Acquisition of equipment for cash 10,000

Proceeds from the sale of long-term investment at book value 20,000

Issuance of common stock for cash 27,000

Depreciation expense 28,000

Redemption of bonds payable at carrying (book) value 35,000

Payment of cash dividends 15,000

Net income 25,000

Purchase of land by issuing bonds payable 45,000

In addition, the following information is available from the comparative balance sheet for Flip at the end of 2013 and 2014:

2014 2013

Cash $ 66,000 $14,000

Accounts receivable (net) 20,000 16,000

Prepaid insurance 18,000 13,000

Total current assets $104,000 $43,000

Accounts payable $ 30,000 $20,000

Salaries payable 3,000 7,000

Total current liabilities $ 33,000 $27,000

Instructions: Prepare Flip's statement of cash flows for the year ended December 31, 2012 using the indirect method.

Question 4: 10 points:

Flip Corporation prepared the following income statement for 2014:

Flip Corporation

Income Statement

For the Year Ended December 31, 2014