Hatch Company has two classes of capital stock: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders' equity. Preferred Stock, 1,000,000 shares authorized, 150,000 shares outstanding $3,000,000
Common Stock, 5,000,000 shares authorized, 2,000,000 shares outstanding $10,000,000
Paid-in Capital in Excess of Par - Preferred Stock $200,000
Paid-in Capital in Excess of Par - Common Stock $27,000,000
Retained Earnings $4,500,000
The following transactions affected stockholders' equity during 2018.
Jan. 1 - 30,000 shares of preferred stock issued at $22 per share.
Feb. 1 - 100,000 shares of common stock issued at $20 per share.
June 1 - Declared a 5% stock dividend on the outstanding common stock when the stock is selling for $25 per share.
June 20 - Issued the stock dividend declared on June 1.
July 1 - 30,000 shares of common treasury stock purchased at $10 per share.
Sept. 15 - 10,000 shares of treasury stock reissued at $11 per share.
Dec. 31 - The preferred dividend is declared, and a common dividend at $0.50 per share is declared.
Dec. 31 - Net income is $2,100,000.
Required:
1. Prepare Journal Entries to Record the Transactions.
2. Prepare the stockholders' equity section for Hatch Company at December 31, 2018. Show all supporting computations.
Answers
1. The preparation of the journal entries to record the stock transactions for the year is as follows:
Jan. 1, 2018: Debit Cash $660,000
Credit Preferred Stock $600,000
Credit Additional paid-in capital-Preferred Stock $60,000
Feb. 1, 2018: Debit Cash $2,000,000
Credit Common Stock $500,000
Credit Additional paid-in capital-Common Stock $1,500,000
June 1, 2018: Debit Retained Earnings $2,625,000
Credit Stock Dividend Distributable $2,625,000
June 20 Debit Stock Distributable $2,625,000
Credit Common Stock $525,000
Credit Additional paid-in capital-Common Stock $2,100,000
July 1, 2018: Debit Treasury Stock $150,000
Debit Additional paid-in capital- Common Stock $150,000
Credit Cash $300,000
Sept. 15, 2018: Debit Cash $110,000
Credit Treasury Stock $50,000
Credit Additional paid-in capital- Common Stock $60,000
Dec. 31, 2018: Debit Dividends: Preferred Stock $3,600,000
Debit Common Stock $1,092,500
Credit Dividends Payable $4,692,500
Dec. 31 Debit Income Summary $2,100,000
Credit Retained Earnings $2,1000,000
2. The Stockholders' Equity Section of Hatch Company's Balance Sheet at December 31, 2018, is as follows:
8%, $20 par value Preferred Stock:
Authorized stock, 1,000,000 shares
180,000 shares, Issued and Outstanding $3,600,000
Additional paid-in capital - Preferred Stock $260,000
Common Stock, $5 par value:
Authorized stock, 5,000,000 shares
2,215,000 shares outstanding $11,075,000
Additional paid-in capital- Common Stock $30,810,000
Treasury Stock (20,000 shares) ($100,000)
Retained Earnings $717,500
Supporting Calculations:
180,000 shares, Issued and Outstanding = $3,600,000 (3,000,000 + 600,000)
Additional paid-in capital - Preferred Stock $260,000 ($200,000 + $60,000)
Common Stock, $5 par value:
Authorized stock, 5,000,000 shares
2,215,000 shares outstanding = $11,075,000 ($10m + $500 + $525 + $50)
Additional paid-in capital- Common Stock = $30,810,000 ($27m + 1.5m + $2.1m - $150 + $60)
Treasury Stock = $100,000 ($150,000 - $50,000)
Retained Earnings = $717,500 ($4,500,000 + $2,100,000 - $2,625,000 - $4,692,500)
Data and Calculations:
Capital stock:
8%, $20 par value Preferred Stock:
Authorized stock, 1,000,000 shares
150,000 shares, Issued and Outstanding = $3,000,000
Additional paid-in capital - Preferred Stock $200,000
Common Stock, $5 par value:
Authorized stock, 5,000,000 shares
2,000,000 shares outstanding = $10,000,000
Additional paid-in capital- Common Stock = $27,000,000
Retained Earnings = $4,500,000
Transactions Analysis:
Jan. 1, 2018: Cash $660,000 Preferred Stock $600,000 Additional paid-in capital-Preferred Stock $60,000
Feb. 1, 2018: Cash $2,000,000 Common Stock $500,000 Additional paid-in capital-Common Stock $1,500,000
June 1, 2018: Retained Earnings $2,625,000 Stock Dividend Distributable $2,625,000 (2,000,000 + 100,000 x 5%) 105,000 shares at $25 per share
June 20, 2018: Stock Distributable $2,625,000 Common Stock $525,000 Additional paid-in capital-Common Stock $2,100,000
July 1, 2018: Treasury Stock $150,000 Additional paid-in capital- Common Stock $150,000 Cash $300,000
Sept. 15, 2018: Cash $110,000 Treasury Stock $50,000 Additional paid-in capital- Common Stock $60,000
Dec. 31, 2018: Retained Earnings: Preferred Stock Dividend $3,600,000 (180,000 x $20) Common Stock Dividend $1,092,500 (2,185,000 x $0.50) Dividends Payable $4,692,500
Dec. 31 Income Summary $2,100,000 Retained Earnings $2,1000,000
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Answer:
Explanation:
Date Accounts and explanations Debit ($) Credit ($)
Jan. 1, 2018 Cash (39,900*$23 per share) 917,700
7% Preferred stock (39,900 shares * $20 per share) 798,000
Paid-in capital in excess of par - Preferred stock (39,900 shares * $3 per share) ($23 - $20) 119,700
(To record the issue of preferred shares with premium for cash)
Feb. 1, 2018 Cash (53,400*$21 per share) 1,121,400
Common stock (53,400 shares * $5 per share) 267,000
Paid-in capital in excess of par - Common stock (53,400 shares * $16 per share) ($21 - $5) 854,400
(To record the issue of preferred shares with premium for cash)
June. 1, 2018 Common stock (2,127,000 shares + 53,400 shares = 2,180,400)*$5 per share 10,902,000
Common stock (2,180,400 shares * 2 * $2.5 per share) 10,902,000
(To record stock split of 2 shares issued for every one share held)
July. 1, 2018 Treasury stock (32,000 shares * $10 per share) 320,000
Cash 320,000
(To record the purchase of treasury stock by cash)
Sept. 15, 2018 Cash 122,400
Treasury stock (10,200 shares * $10 per share) 102,000
Paid-in capital in excess of par - Treasury stock (10,200 shares * $2 per share) ($12 - $10) 20,400
Dec. 31, 2018 Income summary (Net income) 2,182,000
Retained earnings 2,182,000
(To record the net income at the end of the year)
Dec. 31, 2018 Retained earnings 1,348,380
Preferred dividends ($3,046,000 + $798,000)*7/100) 269,080
Common dividend (see note) (2,158,600*$0.5 per share) 1079300
(To record the declaration of dividends)
Working note:
Particulars In shares
Total shares issued 2,180,400
Less: Treasury shares 32,000
Add: Reissue of treasury shares 10,200
Total share to be accounted 2,158,600
Note: For stock split, no journal entry is required as there will be no change in the total value but only the number of shares will increase and per share will decrease keeping the total value same. Only memorandum entries are prepared.
The common stock dividend per share is confusing with another symbol whether it is $5 per share or $0.5 per share, so it is assumed as $0.5 per share is declared as dividend for common stock.
Note: Since no question is asked in this post, it is assumed that journal entries are required to record transactions that occurred during 2018.
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Accounts receivable in an existing business:A) are rarely worth their face value.B) unlike inventory, are often worth their face value.C) appreciate over time due to interest and penalties.D) are not a significant consideration when buying anexisting business
You would like to retire in 30 years. The expected rate of inflation is 2% per year. You currently have a standard of living that requires $7940 of monthly expenses. Assuming you want to maintain the same standard of living in retirement, what are your monthly expenses expected to be the first year of retirement
The business purchased an office rack from Zuhdi Bhd for RM8,000 andpaid cash of RM3,000, the balance is to be paid later. State the journalentry for this transaction,Your answer
A bottle of wine costs $8 and a quiche, $5. At Robert's present levels of consumption, he spends all his income and receives marginal utility of $10 from the last bottle of wine and marginal utility of $4 from the last quiche. To maximize his total utility, Robert should a. buy less wine and more quiche. b. buy more wine and less quiche. c. spend all of his money on wine. d. spend all of his money on quiche.
Government purchases 300
Exports 100
Imports 200
Wages 800
Refer to Table above. Consider the data above (in billions of dollars) for an economy:
Gross domestic product (in billions of dollars) for this economy equals
A) $2,200.
B) $1,600.
C) $1,400.
D) $1,200
Answers
Answer:
GDP= $1,200
Explanation:
From the question above, we are given the following values
Consumption expenditure= $800
Investment expenditures= $200
Government purchases= $300
Imports= $100
Exports= $200
Wages= $800
Therefore the Gross Domestic Product(GDP) can be calculated as follows
GDP=Consumption+investment+government spending+(export-import)
= $800+$200+$300+($100-$200)
= $800+$200+$300+(-$100)
= $800+$200+$300-$100
= $1,200
Hence the Gross Domestic Product (in billions of dollars) for this economy is $1,200
Answers
Answer:
The answer is "74,000".
Explanation:
Please find the complete question in the attached file.
Profitability analysis of the total business:
The combined value for final sales
Low cost of manufacturing end products:
Wool's cost
Process cost of segregation
Combined dyeing cost s
Gain benefit
Final answer:
To determine the overall profit in industries that process joint products, calculate the difference between the sales value of the final products and the costs of the raw materials inputs.
Explanation:
In industries that process joint products, the overall profit can be determined by calculating the difference between the sales value of the final products and the costs of the raw materials inputs. To find out the overall profit, follow these steps:
- Calculate the total sales value of the final products by summing up the sales values of all the final products.
- Calculate the total costs of the raw materials inputs by summing up the costs of all the raw materials.
- Subtract the total costs of raw materials inputs from the total sales value of the final products.
The resulting value will be the overall profit if all intermediate products are processed into final products.
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Answers
Answer:
January 1, Year 1 Cash $56017.5 Dr
Discount on Bonds Payable $1732.5 Dr
Bonds Payable $57750 Cr
Explanation:
The value of bonds which are issued at par is denoted by 100. If the bonds are issued at anything above 100 denomination, this means that the bonds are issued at a premium and if the denoted figure is less than 100, like in this question it is 97, the bonds are issued at a discount.
The cash received on the issuance of this bond will be 97% of the face value of the bond and the 3% will be the discount on the issuance of these bonds.
Thus, the cash received is = 57750 * 97% = $56017.5
The discount on Bonds Payable = 57750 - 56017.5 = $1732.5
The journal entry to record the bond issuance and the receipt of cash would be:
Date Account title Debit Credit
Year 1 Cash $56,017.5
Discount on Bonds Payable $1, 732.5 Dr
Bonds Payable $57, 750 Cr
How to make the journal entry?
Since the bonds were issued at 97, this means they were issued at a discount. The discount on bonds payable is the difference between the face value and the issue price.
Issue Price = $57,750 x 97%
= $56,017.50
Bond Discount = $57,750 - $56,017.50
= $1,732.50
The journal entry to record the issuance of the bonds on January 1, Year 1, would include:
Debit Cash for the amount received ($56,017.50).
Debit Discount on Bonds Payable for the discount amount ($1,732.50).
Credit Bonds Payable for the face value of the bonds ($57,750).
This entry reflects the receipt of cash and the creation of a liability for the face value of the bonds. The discount account represents the additional interest expense that will be recognized over the life of the bonds.
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Answers
Answer:
Variable per hour is $7
total variable costs for 700 hours=$4900
Fixed costs is $600
Explanation:
Under the high-low method,variable cost formula is as stated below
variable cost=highest maintenance cost-lowest maintenance/machine hours at highest maintenance cost-machine hours at the lowest maintenance cost
highest maintenance cost is $5500
lowest maintenance is $2700
machine hours at highest maintenance cost is 700 hours
machine hours at lowest maintenance cost is 300 hours
variable cost=($5500-$2700)/(700-300)
variable cost=$7
Fixed cost=total cost-total variable cost
total variable cost for 700 hours =$7*700=$4,900
Fixed cost=$5,500-$4900
fixed cost=$600
Assets 2016
Cash and securities $2,145
Accounts receivable 8,970
Inventories 12,480
Total current assets $23,595
Net plant and equipment $15,405
Total assets $39,000
Liabilities and Equity Accounts payable $7,410
Accruals 4,290
Notes payable 5,460
Total current liabilities $17,160
Long-term bonds $7,800
Total liabilities $24,960
Common stock $5,460
Retained earnings 8,580
Total common equity $14,040
Total liabilities and equity $39,000
Income Statement (Millions of $) 2016
Net sales $58,500
Operating costs except depreciation 54,698
Depreciation 1,024
Earnings before interest and taxes (EBIT) $2,779
Less interest 829
Earnings before taxes (EBT) $1,950
Taxes 683
Net income $1,268
Other data: Shares outstanding (millions) 500.00
Common dividends (millions of $) $443.63
Int rate on notes payable & L-T bonds 6.25%Federal plus state income tax rate 35%Year-end stock price $23.77A. What is the firm's current ratio?B. What is the firm's quick ratio?C. What is the firm's days sales outstanding? Assume a 365-day year for this calculation.D. What is the firm's total assets turnover?E. What is the firm's inventory turnover ratio?F. What is the firm's TIE?G. What is the firm's debt/assets ratio?H. What is the firm's ROA?I. What is the firm's ROE?
Answers
Answer:
A. 1.375
B. 0.648
C. 77.87 days
D. 1.5 times
E. 4.69 times
F. 3.35 times
G. 34 %
H. 4.63 %
I. 23.22%
Explanation:
A. What is the firm's current ratio
current ratio = current assets / current liabilities
= $23,595 / $17,160
= 1.375
B. What is the firm's quick ratio
quick ratio = (current assets - inventory) / current liabilities
= ($23,595 - $12,480) / $17,160
= 0.648
C. What is the firm's days sales outstanding Assume a 365-day year for this calculation.
days sales outstanding = Inventory / (Sales / 365)
= $12,480 / ($58,500 /365)
= 77.87 days
D. What is the firm's total assets turnover
total assets turnover = Sales / Total Assets
= $58,500 / $39,000
= 1.5 times
E. What is the firm's inventory turnover ratio?
inventory turnover ratio = Sales / Inventory
= $58,500 / $12,480
= 4.69 times
F. What is the firm's TIE?
Total Interest Expense (TIE) = Earnings before interest and taxes (EBIT) / Total Interest Expense
= $2,779 / $829
= 3.35 times
G. What is the firm's debt/assets ratio?
debt/assets ratio = Total Debt / Total Assets × 100
= ($5,460 + $ $7,800) / $39,000 × 100
= 34 %
H. What is the firm's ROA?
Return on Assets (ROA) = Earnings Before Interest After Tax (EBIAT) / Total Assets × 100
= ($1,268 + ($829 × 65%)) / $39,000 × 100
= 4.63 %
I. What is the firm's ROE?
Return on Equity (ROE) = Net Income / Total Shareholders Funds
= $1,268 / $5,460 × 100
= 23.22%
Final answer:
The current ratio is 1.37, the quick ratio is 0.65, and the days sales outstanding is 56.15.
Explanation:
A. The current ratio is calculated by dividing total current assets by total current liabilities:
Current Ratio = Total Current Assets / Total Current Liabilities
Current Ratio = $23,595 / $17,160
Current Ratio = 1.37
B. The quick ratio, also known as the acid-test ratio, is calculated by dividing quick assets by total current liabilities:
Quick Ratio = (Cash and Securities + Accounts Receivable) / Total Current Liabilities
Quick Ratio = ($2,145 + $8,970) / $17,160
Quick Ratio = 0.65
C. The days sales outstanding measures how long it takes for a company to collect its accounts receivable:
Days Sales Outstanding = Accounts Receivable / (Net Sales / 365)
Days Sales Outstanding = $8,970 / ($58,500 / 365)
Days Sales Outstanding = 56.15
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What is your optimal strategy?
Your optimal strategy is to _________ the proposed division.
A. Accept
B. Reject
Now suppose instead that you propose the division of the dollar. Your classmate will then accept or reject your division. If the classmate accepts, then you each receive the portion of the dollar as you have proposed. However, if your classmate rejects, then you both get nothing.
Your optimal strategy is to offer your classmate $ 0.99. (Enter a numeric response to two decimal places)
Answers
Answer: The correct answers are "A. Accept" and "$ 0.01".
Explanation: Given that we talk about optimal strategy when maximizing the expected profit by the player:
In the first case It is convenient to accept the proposal and keep $ 0.12, instead of rejecting it and running out of nothing.
And in the second case it is convenient to give the classmate as little as possible so that he accepts and we have a greater profit.