acct221 quiz 1 latest 2015

1) Whitney Houston Lives in our Hearts Forever Corporation was organized on January 1, 2011. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:

	2011	$ 8,000
	2012	$30,000
	2013	$70,000

Instructions

(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative. (3 pts)

(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative. (3 pts)

(c) Journalize the declaration of the cash dividend at December 31, 2013 using the assumption of part (b). (2 pts)

2) On January 1, 2012, Cher Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:

Mar.	1		Issued 25,000 shares of common stock for $550,000.
June	1		Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
June	30		Paid the $2.00 cash dividend.
Dec.	1		Purchased 5,000 shares of common stock for the treasury for $22 per share.
Dec. Dec.	15 31		Declared a cash dividend on outstanding shares of $2.25 per share to stockholders of record on December 31. Issued 1,000 treasury stock purchased above for $24 per share.

Instructions

Prepare journal entries to record the above transactions. (15 pts)

Date	Description/Account	Debit	Credit

3) On January 1 Dolly Parton Corporation purchased a 35% equity in Fabulous Wig Corporation for $220,000. At December 31 Fabulous Wig Corp. declared and paid a $60,000 cash dividend and reported net income of $200,000. (9 pts)

Instructions

(a) Journalize the transactions.

(b) Determine the amount to be reported as an investment in Fabulous Wig Corp. stock at December 31.

Date	Account	Debit	Credit

4) Rosco Company purchased 35,000 shares of common stock of Paxton Corp as an investment for $900,000. During the year, Paxton Corporation reported net income of $300,000 and paid dividends of $100,000. (18 pts) Instructions (a) Assuming that the 35,000 shares represent a 10% interest in Paxton Corporation and Rosco intends to hold the investment short-term: 1. Prepare the journal entry to record the investment in Paxton stock. 2. Prepare any entries that Rosco Company should make in accounting for its investment in Paxton stock during the year. 3. What is the balance of the Stock Investments account on Rosco Company's (b) Assuming that the 35,000 shares represent a 10% interest in Paxton Corporation and Rosco intends to hold the stock for a longer time but keep the securities available for sale: 1. Prepare the journal entry to record the investment in Paxton stock. 2. Prepare any entries that Rosco Company should make in accounting for its investment in Paxton stock during the year. 3. What is the balance of the Stock Investments account on Rosco Company's

Date	Account	Debit	Credit