Journal Entries. Part $1$ Instructions:

Use the letter for each as the date 

A$.$ Issued $1000$ shares of $$10$ par common stock at $$11,$ receiving cash. $(6$ points$)$

B$.$ Issued $ $20000$ of $10$ year $10\%$ bonds at a market $($effective$)$ interest rate of $9\%,$

with interest payable semiannually. $(6$ points$)$

Use the Present Value Tables in Appendix A of text book. Round all

calculations to the nearest dollar.

C$.$ Declared a dividend of $$0\mathrm{.}25$ per share on common stock. On date of declaration,

$3200$ shares of common stock were outstanding. $(3$ points$)$

D$.$ Paid cash dividend from $($c$)$ above. $(2$ points$)$

E$.$ Purchased $1200$ shares of Jones Company for $$10$ per share, plus $$600$ commission.

Our company purchased less than $20\%$ of the outstanding stock of Jones Company. $(3$ points$)$

F$.$ Declared a $5\%$ stock dividend on the $$10$ par common stock when the $(6$ points$)$

market price was $ $25$ per share. There were $3200$ Shares outstanding.

G$.$ Distributed the stock dividends declared in $($F$).(2$ points$)$

H$.$ Purchased $$5000$ of $5\%$ bonds at par. $(3$ points$)$

Interest is payable semiannually.

I. Purchased $60$ shares of treasury common stock for $$12$ per share. $(3$ points$)$

J$.$ Received semiannual interest from bonds purchased in $($H$).(3$ points$)$

K$.$ Received a total cash dividend of $$120$ from Jones Company. $(3$ points$)$

L$.$ Received a $$200$ dividend from our investment in Masco Company stock.

This investment is accounted for under the equity method. $(3$ points$)$

M$.$ Sold, at $$17$ per share, $30$ shares of treasury common stock purchased in $($I$).(6$ points$)$

N$.$ Sold $240$ shares of Jones company stock purchased in $($E$)$ for $$13$

per share, including commission. $(6$ points$)$

O$.$ Masco Company's total earnings are $$10000.$ We own $40\%.$ Record the earnings

for our company using the equity method. $(3$ points$)$

P$.$ Sold the bonds purchased in $($H$)$ at $103$ plus $$63$ in accrued interest. $(8$ points$)$

Q$.$ At the end of the accounting period, the remaining shares of Jones Company stock

increased $$2\mathrm{.}00$ per share $(3$ Points$)$

R$.$ Record the payment of semiannual interest on the bonds issued in $($B$)$

and the amortization of the premium for six months.

 

The amortization is determined using the straight$-$line method. $(6$ points$)$

Round all calculations to the nearest dollar.

Journal Entries

Part $2$ Instructions: Page $2$

Debit Credit

Cash $60,000$

Accounts receivable $39,000$

Allowance for doubtful accounts $2,000$

Equity Investments at cost $10,000$

Valuation allowance for Equity Investments $1,000$

Merchandise inventory at lower of cost $($FIFO$)$ or market $4,000$

Prepaid expenses $600$

Interest receivable $400$

Investment in Masco Company stock $3,000$

Store buildings and equipment $61,000$

Accumulated depreciationstore buildings and equipment $30,000$

Accounts payable $14,980$

Income tax payable $2,000$

Bonds payable, $10\%,$ due in $10$ years $20,000$

Premium on bonds payable $1,000$

Retained earnings, January $1,20$X$145,610$

Cash dividends $,$ January $1,20$X$1$ balance $0$

Stock Dividends, January $1,20$X$1$ balance $0$

Common stock, $$10$ par $(100,000$ shares authorized; $2200$ shares

outstanding$),$ January $1,20$X$1$

$22,000$

Paid$-$in capital in excess of parcommon stock, January $1,20$X$12,200$

Paid$-$in capital from sale of treasury stock, January $1,20$X$10$

Treasury stock, January $1,20$X$10$

Sales $140,000$

Gain from sale of investment $200$

Unrealized gain$($loss$)$ on Equity Investments $1,920$

Dividend revenue $160$

Interest revenue $540$

Income of Masco Company $4,000$

Cost of goods sold $80,000$

Advertising expense $$2,000$

Depreciation expensestore buildings and equipment $1,400$

Miscellaneous selling expenses $1,000$

Sales commissions $4,000$

Office rent expense $10,000$

Office salaries expense $12,000$

Miscellaneous administrative expenses $200$

Interest expense $1,000$

Income tax expense $8,000.$ The balances listed below are for December $31$ and already include the journal entries you just

prepared except for the stockholders' equity accounts. The balances listed for the stockholders' equity

accounts are the January $1$ balances. You will need to utilize the journal entries you just prepared to

complete the Statement of Stockholders' Equity. Prepare a multistep income statement, a statement of stockholders' equity, and a classified balance

sheet in good form for the year ended December $31,20$X$1.$ Use the Student Input Form $($Excel File$)$ to complete the Financial Statements.