Expert Answers

P11-1A  Hayslett Corporation was organized on January 1, 2011. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year.

Jan. 10 Issued 100,000 shares of common stock for cash at $3 per share.
Mar. 1 Issued 10,000 shares of preferred stock for cash at $55 per share.
Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000. The company’s estimate of the fair market value of the land was $85,000.
May 1 Issued 75,000 shares of common stock for cash at $4 per share.
Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000 for services provided in helping the company organize.
Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $58 per share.

Journalize stock transactions, post, and prepare paid-in capital section.
(SO 2, 4, 7)
Instructions
(a) Journalize the transactions.
(b) Post to the stockholders’ equity accounts. (Use J1 as the posting reference.)
(c) Prepare the paid-in capital section of stockholders’ equity at December 31, 2011.
Total paid-in capital $1,431,000
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P11-2A
Greeve Corporation had the following stockholders’ equity accounts on January 1, 2011: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and Retained Earnings $100,000. In 2011, the company had the following treasury stock transactions.

Mar.  1 Purchased 5,000 shares at $7 per share.
June  1 Sold 1,000 shares at $10 per share.
Sept. 1 Sold 2,000 shares at $9 per share.
Dec.  1 Sold 1,000 shares at $5 per share.

Greeve Corporation uses the cost method of accounting for treasury stock. In 2011, the company reported net income of $60,000.
Journalize and post treasury stock transactions, and prepare stockholders’ equity section.
(SO 3, 7)
Instructions
(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2011, for net income.
(b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3)Retained Earnings. Post to these accounts using J12 as the posting reference.
Treasury Stock $7,000
(c) Prepare the stockholders’ equity section for Greeve Corporation at December 31, 2011.
Total stockholders’ equity $1,058,000

Wiley assignment
E9-7
Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method.  (Round cost per mile to 2 decimal places, e.g. 10.50. Use rounded amount for future calculations. Round final answers to 0 decimal places, e.g. 125.)

E10-5

Don Walls’s gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.
What was Walls’s net pay for the week? (Round answer to 2 decimal places, e.g. 10.50.)
1780-301.63-135.73 = 1342.64
Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries Payable; not Cash.) (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 2 decimal places, e.g. 10.50.)

Record the issuing of the check for Walls’s pay in the general journal. (Round answers to 2 decimal places, e.g. 10.50.)

E10-10
On January 1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following.
The issuance of the bonds.
The payment of interest on July 1, assuming that interest was not accrued on June 30.

The accrual of interest on December 31.

E10-11

On January 1, Flory Company issued $300,000, 8%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following events.
The issuance of the bonds.
The payment of interest on July 1, assuming no previous accrual of interest.
The accrual of interest on December 31.

E10-15

Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2011. The terms provide for semiannual installment payments of $20,000 on June 30 and December 31.
Prepare the journal entries to record the mortgage loan and the first two installment payments. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
E10-18

Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for $562,613. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize bond premium or discount.
Prepare the journal entries to record the following. (Round answers to 0 decimal places, e.g. 125. Use rounded amounts for future computations.)
The issuance of the bonds. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
The payment of interest and the discount amortization on July 1, 2011, assuming that interest was not accrued on June 30. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
The accrual of interest and the discount amortization on December 31, 2011. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)

P10-5A

Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2010. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.
Complete the installment payments schedule for the first 2 years. (Round answers to 0 decimal places, e.g. 125. Use rounded amounts for future calculations.)
Semiannual
Prepare the entries for (1) the loan and (2) the first two installment payments. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answer to 0 decimal places, e.g. 125.)
Show how the total mortgage liability should be reported on the balance sheet at December 31, 2011. (Round answer to 0 decimal places, e.g. 125.)

P10-9A

Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2011. The bonds were dated July 1, 2011, and pay interest July 1 and January 1. Elkins Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.
Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2011, assuming that the bonds sold at 104. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Prepare journal entries as in the previous part of the question assuming that the bonds sold at 98. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date Account/Description Debit Credit
Show balance sheet presentation for each bond issue at December 31, 2011. (Enter all amounts as positive amounts and subtract where necessary.)