ACCT-551-65658

1. (TCO A) On July 1, 2010, an interest payment date, $60,000 of Parks Co. bonds were converted into 1,200 shares of Parks Co. common stock, each having a par value of $45 and a market value of $54. There is $2,400 unamortized discount on the bonds. Using the book value method, Parks would record (Points : 5)

Question 2.2. (TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
(Points : 5)

Question 3.3. (TCO A) On July 1, 2010, Ellison Company granted Sam Wine, an employee, an option to buy 400 shares of Ellison Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $1,800. Wine exercised his option on October 1, 2010 and sold his 400 shares on December 1, 2010. Quoted market prices of Ellison Co. stock in 2010 were
 

July 1               $30 per share
October 1         $36 per share
December 1      $40 per share

The service period is for 3 years, beginning January 1, 2010. As a result of the option granted to Wine, using the fair value method, Ellison should recognize compensation expense on its books in the amount of (Points : 5)

Question 4.4. (TCO A) Sharon Inc. issued to its existing common stockholders 1000 warrants. Each warrant entitles the stockholder to purchase 2 shares of common stock at a price of $5 each. The common stock of the company is selling in the stock exchange at $10 each. If Wonderful has 29,000 shares of common stock outstanding throughout the year and its Net Income is $12,000 after paying the preferred dividends, what will be the dilutive EPS of Wonderful incorporation under treasury stock method? Round your answer to two decimal points. (Points : 5)

Question 5.5. (TCO A) Foyle, Inc., had 560,000 shares of common stock issued and outstanding at December 31, 2010. On July 1, 2011, an additional 40,000 shares of common stock were issued for cash. Foyle also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the beginning and end of 2011. The average market price of Foyle's common stock was $20 during 2011. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2011? (Points : 5)