The stockholders equity section of Vaughn Inc at the beginning of the current year appears below Common stock, $10 par value, authorized 911,000 shares, 309,000 shares issued and outstanding $3,090,000 Paid in capital in excess of parcommon stock 646,000 Retained earnings 604,000 During the current year, the following transactions occurred 1 The company issued to the stockholders 102,000 rights Ten rights are needed to buy one share of stock at $35 The rights were void after 30 days The market price of the stock at this time was $37 per share 2 The company sold to the public a $181,000, 10 bond issue at 97 The company also issued with each $1,000 bond ten detachable stock purchase warrants, which provided for the purchase of common stock at $33 per share Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8 3 All but 5,100 of the rights issued in (1) were exercised in 30 days 4 At the end of the year, 80 of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing 5 During the current year, the company granted stock options for 10,700 shares of common stock to company executives The company, using a fair value option pricing model, determines that each option is worth $10 The option price is $33 The options were to expire at year end and were considered compensation for the current year 6 All but 1,070 shares related to the stock option plan were exercised by year end The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract Prepare general journal entries for the current year to record the transactions listed above (Credit account titles are automatically indented when amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter for the amounts Round intermediate calculations to 7 decimal places, e g 1 2468756 and final answers to decimal places, e g 5,125 ) No Account Titles and Explanation Debit Credit 1 2 3 4 5 6 For options exercised For options lapsed Prepare the stockholders' equity section of the balance sheet at the end of the current year Assume that retained earnings at the end of the current year is $759,000 Vaughn Inc Balance Sheet $ $ $

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 22, 2024

The stockholders equity section of Vaughn Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 911,000 shares, 309,000

The stockholders equity section of Vaughn Inc. at the beginning of the current year appears below.

Common stock, $10 par value, authorized 911,000 shares, 309,000 shares issued and outstanding		$3,090,000
Paid-in capital in excess of parcommon stock		646,000
Retained earnings		604,000

During the current year, the following transactions occurred.

1.		The company issued to the stockholders 102,000 rights. Ten rights are needed to buy one share of stock at $35. The rights were void after 30 days. The market price of the stock at this time was $37 per share.
2.		The company sold to the public a $181,000, 10% bond issue at 97. The company also issued with each $1,000 bond ten detachable stock purchase warrants, which provided for the purchase of common stock at $33 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.
3.		All but 5,100 of the rights issued in (1) were exercised in 30 days.
4.		At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing.
5.		During the current year, the company granted stock options for 10,700 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $33. The options were to expire at year-end and were considered compensation for the current year.
6.		All but 1,070 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract.

image text in transcribed

Prepare general journal entries for the current year to record the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round intermediate calculations to 7 decimal places, e.g. 1.2468756 and final answers to decimal places, e.g. 5,125.) No. Account Titles and Explanation Debit Credit 1. 2. 3. 4. 5. 6. For options exercised: | For options lapsed: Prepare the stockholders' equity section of the balance sheet at the end of the current year. Assume that retained earnings at the end of the current year is $759,000. Vaughn Inc. Balance Sheet $ $ $