Based on the following information, prepare journal entries for Windgate Corporation
QUESTION 1
Based on the following information, prepare journal entries for Windgate Corporation.
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Mar. 7 |
Issued 10,000 shares of $5 par common stock for $43,000 cash. |
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16 |
Issued 6,000 shares of $5 par common stock for $33,000 cash. |
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23 |
Issued 4,000 shares of $12 par, 7% preferred stock for $53,000 cash. |
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29 |
Issued 5,000 shares of $4 par common stock for land with a fair market value of $28,000. |
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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QUESTION 2
Prepare the appropriate general journal entries for the following treasury stock transactions of Aberdeen Inc.
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Oct. 15 |
Purchased 7,000 shares of its $15 par common stock for $70,000 and placed the stock in the treasury. |
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Dec. 1 |
Sold 2,000 shares of the treasury stock for $18,000 cash. |
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Dec. 31 |
Sold the remaining treasury stock for $56,000 cash. |
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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QUESTION 3
Prepare appropriate general journal entries for each of the following transactions for Mainstream Technologies, Inc.
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Mar. 25 |
Declared a 10% stock dividend to common shareholders. The market value of the common stock is $12 per share. The par value is $10. There are 100,000 shares of common stock currently outstanding. |
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Apr. 1 |
Issued the stock certificates for the stock dividend. |
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July 31 |
Declared a two-for-one stock split. |
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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QUESTION 4
Island Cove Corporation had the following bond issue:
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Date of issue/sale: May 1, 20-A |
Principal: $500,000 |
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Sale price of bonds: 104 |
Life of bonds: 10 years |
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Stated rate: 6% a year payable semiannually on October 31 and April 30 |
Required:
Prepare the following general journal entries.
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a. |
The issuance of the bonds on May 1, 20-A. |
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b. |
The first interest payment for 20-A. |
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c. |
The adjusting entry for December 31, 20-A. |
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d. |
The reversing entry for January 1, 20-B. |
a.
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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b.
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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c.
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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d.
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GENERAL JOURNAL |
Page 1 |
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Date |
Description |
Post Ref. |
Debit |
Credit |
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QUESTION 5
The following activities took place at Amity Harbor Corporation during the past year. Indicate whether each activity is a cash inflow (+) or cash outflow (-), and whether it is an operating (O), investing (I), or financing (F) activity.
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Inflow/ Outflow |
Activity |
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a. |
Salaries paid to employees |
_______ |
______ |
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b. |
Payment of dividends to our stockholders |
_______ |
______ |
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c. |
Payment to purchase productive assets |
_______ |
______ |
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d. |
Proceeds from the sale of productive assets |
_______ |
______ |
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e. |
Payment for the purchase of inventory |
_______ |
______ |
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f. |
Interest received on loans made to outside entities |
_______ |
______ |
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g. |
Payments to suppliers and for other expenses |
_______ |
______ |
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h. |
Payments to purchase treasury stock |
_______ |
______ |
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i. |
Repayment of the principal on loans |
_______ |
______ |
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j. |
Cash receipts from sale of services |
_______ |
______ |
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k. |
Proceeds from the issuance of common stock |
_______ |
______ |
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l. |
Dividends received on investment made in the stock of another corporation |
_______ |
______ |
QUESTION 6
Use the following comparative income statements and balance sheets to complete the required ratio analysis.
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Comparative Income Statement For the Years Ended December 31, 20-C and 20-B |
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20-C |
20-B |
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Net sales |
$965,400 |
$1,028,600 |
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Cost of goods sold |
515,100 |
590,300 |
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Gross profit |
$450,300 |
$ 438,300 |
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Operating expenses: |
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Selling expenses |
$142,000 |
$ 173,400 |
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Administrative expenses |
150,200 |
182,400 |
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Interest expense |
29,300 |
34,100 |
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Total operating expenses |
$321,500 |
$ 389,900 |
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Income tax expense |
45,500 |
18,200 |
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Total expenses |
$367,000 |
$ 408,100 |
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Net income |
$ 83,300 |
$ 30,200 |
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Comparative Balance Sheets December 31, 20-C and 20-B |
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Assets |
20-C |
20-B |
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Cash |
$ 45,100 |
$ 48,500 |
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Accounts receivable (net) |
59,800 |
101,500 |
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Merchandise inventory |
150,900 |
171,600 |
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Property, plant, and equipment (net) |
710,500 |
808,800 |
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Total assets |
$966,300 |
$1,130,400 |
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Liabilities and Stockholders' Equity |
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Accounts payable |
$108,200 |
$ 151,600 |
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Notes payable (due 6/30/-D) |
70,000 |
70,000 |
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Bonds payable (45% due each June) |
154,000 |
280,000 |
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Common stock, $10 par value |
420,000 |
420,000 |
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Retained earnings |
214,100 |
208,800 |
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Total liabilities and stockholders' equity |
$966,300 |
$1,130,400 |
Additional information:
All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $153,100; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding, 42,000.
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20-C |
20-B |
|
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Number of common shares |
42,000 |
42,000 |
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Dividends paid |
$44,400 |
$49,000 |
Required:
Prepare a liquidity analysis by calculating for 20-B and 20-C the (a) current ratio, (b) quick ratio, (c) accounts receivable turnover, and (d) merchandise inventory turnover. Indicate whether there has been an improvement or not from 20-B to 20-C. Round all answers to two decimal places.
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20-C |
20-B |
Improvement? |
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a. |
Current ratio |
____ |
____ |
Yes or No |
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b. |
Quick ratio |
____ |
____ |
Yes or No |
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c. |
Accounts receivable turnover and average collection period |
____ |
____ |
Yes or No |
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d. |
Merchandise inventory turnover and average number of days to sell |
____ |
____ |
Yes or No |
QUESTION 7
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Comparative Income Statement For the Years Ended December 31, 20-C and 20-B |
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|
20-C |
20-B |
|
|
Net sales |
$965,400 |
$1,028,600 |
|
Cost of goods sold |
515,100 |
590,300 |
|
Gross profit |
$450,300 |
$ 438,300 |
|
Operating expenses: |
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Selling expenses |
$136,000 |
$ 169,100 |
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Administrative expenses |
150,200 |
182,400 |
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Interest expenses |
26,000 |
32,500 |
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Total operating expenses |
$312,200 |
$ 384,000 |
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Income tax expenses |
45,500 |
18,200 |
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Total expenses |
$357,700 |
$ 402,200 |
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Net income |
$ 92,600 |
$ 36,100 |
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Comparative Balance Sheet December 31, 20-C and 20-B |
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Assets |
20-C |
20-B |
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Cash |
$ 38,100 |
$ 43,500 |
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Accounts receivable (net) |
59,800 |
101,500 |
|
Merchandise inventory |
150,900 |
171,600 |
|
Property, plant, and equipment |
710,500 |
808,800 |
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Total assets |
$959,300 |
$1,125,400 |
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Liabilities and Stockholders' Equity |
||
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Notes payable (due June 30, 20-D) |
$ 70,000 |
$ 70,000 |
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Accounts payable |
101,200 |
146,600 |
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Bonds payable |
154,000 |
280,000 |
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Common stock, $10 par value |
420,000 |
420,000 |
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Retained earnings |
214,100 |
208,800 |
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Total liabilities and stockholders' equity |
$959,300 |
$1,125,400 |
Additional information:
All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $139,200; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding 42,000.
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20-C |
20-B |
|
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Number of common shares |
42,000 |
42,000 |
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Dividends paid |
$44,400 |
$49,000 |
Prepare a profitability analysis by calculating for 20-B and 20-C the (a) net sales to assets, (b) return on total assets, (c) return on common stockholders' equity, (d) earnings per share, and (e) book value per share. Indicate whether there has been an improvement or not from 20-B to 20-C. Round to two decimal places.
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20-C |
20-B |
Improvement? |
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a. |
Net sales to assets |
______ |
______ |
Yes or No |
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b. |
Return on total assets |
______ |
______ |
Yes or No |
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c. |
Return on common stockholders' equity |
______ |
______ |
Yes or No |
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d. |
Earnings per share |
______ |
______ |
Yes or No |
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e. |
Book value per share |
______ |
______ |
Yes or No |
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Rating:
/5
Solution: Based on the following information, prepare journal entries for Windgate Corporation