Accounting

Accounting 221

1. The outstanding capital stock of Robbins Corporation consisted of 3,000 shares of 10 percent preferred stock, $250 par value, and 30,000 shares of no-par common stock with a stated value of $250. The preferred was issued at $412, the common at $480 per share.

On 2005 January 1, the retained earnings of the company were USD 250,000. During the succeeding five years, net income was as follows:

2005 $767,500

2006  510,00

2007   48,000

2008  160,000

2009  662,500

No dividends were in arrears as of 2005 January 1, and during the five years 2005-2009, the board of directors declared dividends in each year equal to net income of the year.

Provide the journal entries for each year showing the dividends declared on each class of stock assuming the preferred stock is noncumulative:

2. On 2008 December 27, Glade Company was authorized to issue 250,000 shares of $24 par value common stock.

It then completed the following transactions:

2009

Jan. 14 - Issued 45,000 shares of common stock at $30 per share for cash.

Jan. 29 - Gave the promoters of the corporation 25,000 shares of common stock for their services in organizing the company. The board of directors valued these services at $744,000.

Feb. 19 - Exchanged 50,000 shares of common stock for the following assets at the indicated fair market values: Land $216,000, Building 528,000, Machinery 720,000

a. Prepare general journal entries to record the transactions.

b. Prepare the balance sheet of the company as of 2009 March.

3. Following are selected transactions of White Corporation: 2002

Dec. 31, 2002 - The board of directors authorized the appropriation of $50,000 of retained earnings to provide for the future acquisition of a new plant site and the construction of a new building. (On the last day of the next six years, the same action was taken. You need not make entries for these six years.)

Jan. 2, 2007 - Purchased a new plant site for cash, $100,000.

Mar. 29, 2007 - Entered into a contract for construction of a new building, payment to be made within 30 days following completion.

Feb. 10, 2009 - Following final inspection and approval of the new building, Dyer Construction Company was paid in full, $500,000.

Mar. 10, 2009 - The board of directors authorized release of the retained earnings appropriated for the plant site and building.

Apr. 2, 2009 - A 5 percent stock dividend on the 100,000 shares of $50 par value common stock outstanding was declared. The market price on this date was $55 per share.

Prepare journal entries for all of these transactions: