1.
(TCO A) On
January 2, 2011, Mize Co. issued at par $300,000 of 9%
convertible bonds. Each
$1,000 bond is convertible into 30 shares. No bonds were
converted during 2007.
Mize had 50,000 shares of common stock outstanding during
2011. Mize’s 2011 net
income was $160,000 and the income tax rate was 30%. What
would Mize’s diluted
earnings per share for 2011 be (rounded to the nearest
penny)? Please show all
computations.(Points :
25)
2.
(TCO E) The original sale of the $50 par-value common
shares of Gray Company was recorded as follows:
Cash 290,000
Common
stock
250,000
Paid-in capital in excess of par
40,000
Instructions:
Record the treasury stock transactions (given below) under the
cost method.
Transactions:
(a)
Bought 300 shares of common stock as treasury shares at $62
(b)
Sold 80 shares of treasury stock at $60
(c)
Sold four treasury shares at $68
(Points : 30)
3.(TCO
D) Hurst, Incorporated sold its 8% bonds with a maturity
value of $3,000,000 on
August 1, 2009 for $2,946,000. At the time of the sale, the
bonds had 5 years
until they reached maturity. Interest on the bonds is payable
semiannually on
August 1 and February 1. The bonds are callable at 104 at any
time after August
1, 2011. By October 1, 2011, the market rate of interest has
declined and the
market price of Hurst’s bonds has risen to a price of 101.
The firm decides to
refund the bonds by selling a new 6% bond issue to mature in
5 years. Hurst
begins to reacquire its 8% bonds in the market and is able to
purchase $500,000
worth at 101. The remainder of the outstanding bonds is
reacquired by
exercising the bonds’ call feature. In the final analysis,
how much was the gain
or loss experienced by Hurst in reacquiring its 8% bonds?
(Assume the firm used
straight-line amortization.) Show calculations. (Points :
35)
4.
(TCO B) On May 1, 2010, Kirmer Corp. purchased
$450,000 of 12% bonds—with interest payable on January 1 and
July 1—for
$422,800 plus accrued interest. The bonds mature on January
1, 2016.
Amortization is recorded when interest is received by the
straight-line method
(by months and rounded to the nearest dollar). (Assume bonds
are available for
sale.)
Instructions:
(a) Prepare the entry for May 1, 2010.
(b) The bonds are sold on August 1, 2011 for $425,000 plus
accrued
interest. Prepare all entries required to properly record the
sale. (Points : 30)
1.
(TCO A) On
January 2, 2011, Mize Co. issued at par $300,000 of 9%
convertible bonds. Each
$1,000 bond is convertible into 30 shares. No bonds were
converted during 2007.
Mize had 50,000 shares of common stock outstanding during
2011. Mize’s 2011 net
income was $160,000 and the income tax rate was 30%. What
would Mize’s diluted
earnings per share for 2011 be (rounded to the nearest
penny)? Please show all
computations.(Points :
25)
2.
(TCO E) The original sale of the $50 par-value common
shares of Gray Company was recorded as follows:
Cash 290,000
Common
stock
250,000
Paid-in capital in excess of par
40,000
Instructions:
Record the treasury stock transactions (given below) under the
cost method.
Transactions:
(a)
Bought 300 shares of common stock as treasury shares at $62
(b)
Sold 80 shares of treasury stock at $60
(c)
Sold four treasury shares at $68
(Points : 30)
3.(TCO
D) Hurst, Incorporated sold its 8% bonds with a maturity
value of $3,000,000 on
August 1, 2009 for $2,946,000. At the time of the sale, the
bonds had 5 years
until they reached maturity. Interest on the bonds is payable
semiannually on
August 1 and February 1. The bonds are callable at 104 at any
time after August
1, 2011. By October 1, 2011, the market rate of interest has
declined and the
market price of Hurst’s bonds has risen to a price of 101.
The firm decides to
refund the bonds by selling a new 6% bond issue to mature in
5 years. Hurst
begins to reacquire its 8% bonds in the market and is able to
purchase $500,000
worth at 101. The remainder of the outstanding bonds is
reacquired by
exercising the bonds’ call feature. In the final analysis,
how much was the gain
or loss experienced by Hurst in reacquiring its 8% bonds?
(Assume the firm used
straight-line amortization.) Show calculations. (Points :
35)
4.
(TCO B) On May 1, 2010, Kirmer Corp. purchased
$450,000 of 12% bonds—with interest payable on January 1 and
July 1—for
$422,800 plus accrued interest. The bonds mature on January
1, 2016.
Amortization is recorded when interest is received by the
straight-line method
(by months and rounded to the nearest dollar). (Assume bonds
are available for
sale.)
Instructions:
(a) Prepare the entry for May 1, 2010.
(b) The bonds are sold on August 1, 2011 for $425,000 plus
accrued
interest. Prepare all entries required to properly record the
sale. (Points : 30)
1.
(TCO A) On
January 2, 2011, Mize Co. issued at par $300,000 of 9%
convertible bonds. Each
$1,000 bond is convertible into 30 shares. No bonds were
converted during 2007.
Mize had 50,000 shares of common stock outstanding during
2011. Mize’s 2011 net
income was $160,000 and the income tax rate was 30%. What
would Mize’s diluted
earnings per share for 2011 be (rounded to the nearest
penny)? Please show all
computations.(Points :
25)
2.
(TCO E) The original sale of the $50 par-value common
shares of Gray Company was recorded as follows:
Cash 290,000
Common
stock
250,000
Paid-in capital in excess of par
40,000
Instructions:
Record the treasury stock transactions (given below) under the
cost method.
Transactions:
(a)
Bought 300 shares of common stock as treasury shares at $62
(b)
Sold 80 shares of treasury stock at $60
(c)
Sold four treasury shares at $68
(Points : 30)
3.(TCO
D) Hurst, Incorporated sold its 8% bonds with a maturity
value of $3,000,000 on
August 1, 2009 for $2,946,000. At the time of the sale, the
bonds had 5 years
until they reached maturity. Interest on the bonds is payable
semiannually on
August 1 and February 1. The bonds are callable at 104 at any
time after August
1, 2011. By October 1, 2011, the market rate of interest has
declined and the
market price of Hurst’s bonds has risen to a price of 101.
The firm decides to
refund the bonds by selling a new 6% bond issue to mature in
5 years. Hurst
begins to reacquire its 8% bonds in the market and is able to
purchase $500,000
worth at 101. The remainder of the outstanding bonds is
reacquired by
exercising the bonds’ call feature. In the final analysis,
how much was the gain
or loss experienced by Hurst in reacquiring its 8% bonds?
(Assume the firm used
straight-line amortization.) Show calculations. (Points :
35)
4.
(TCO B) On May 1, 2010, Kirmer Corp. purchased
$450,000 of 12% bonds—with interest payable on January 1 and
July 1—for
$422,800 plus accrued interest. The bonds mature on January
1, 2016.
Amortization is recorded when interest is received by the
straight-line method
(by months and rounded to the nearest dollar). (Assume bonds
are available for
sale.)
Instructions:
(a) Prepare the entry for May 1, 2010.
(b) The bonds are sold on August 1, 2011 for $425,000 plus
accrued
interest. Prepare all entries required to properly record the
sale. (Points : 30)
1.
(TCO A) On
January 2, 2011, Mize Co. issued at par $300,000 of 9%
convertible bonds. Each
$1,000 bond is convertible into 30 shares. No bonds were
converted during 2007.
Mize had 50,000 shares of common stock outstanding during
2011. Mize’s 2011 net
income was $160,000 and the income tax rate was 30%. What
would Mize’s diluted
earnings per share for 2011 be (rounded to the nearest
penny)? Please show all
computations.(Points :
25)
2.
(TCO E) The original sale of the $50 par-value common
shares of Gray Company was recorded as follows:
Cash 290,000
Common
stock
250,000
Paid-in capital in excess of par
40,000
Instructions:
Record the treasury stock transactions (given below) under the
cost method.
Transactions:
(a)
Bought 300 shares of common stock as treasury shares at $62
(b)
Sold 80 shares of treasury stock at $60
(c)
Sold four treasury shares at $68
(Points : 30)
3.(TCO
D) Hurst, Incorporated sold its 8% bonds with a maturity
value of $3,000,000 on
August 1, 2009 for $2,946,000. At the time of the sale, the
bonds had 5 years
until they reached maturity. Interest on the bonds is payable
semiannually on
August 1 and February 1. The bonds are callable at 104 at any
time after August
1, 2011. By October 1, 2011, the market rate of interest has
declined and the
market price of Hurst’s bonds has risen to a price of 101.
The firm decides to
refund the bonds by selling a new 6% bond issue to mature in
5 years. Hurst
begins to reacquire its 8% bonds in the market and is able to
purchase $500,000
worth at 101. The remainder of the outstanding bonds is
reacquired by
exercising the bonds’ call feature. In the final analysis,
how much was the gain
or loss experienced by Hurst in reacquiring its 8% bonds?
(Assume the firm used
straight-line amortization.) Show calculations. (Points :
35)
4.
(TCO B) On May 1, 2010, Kirmer Corp. purchased
$450,000 of 12% bonds—with interest payable on January 1 and
July 1—for
$422,800 plus accrued interest. The bonds mature on January
1, 2016.
Amortization is recorded when interest is received by the
straight-line method
(by months and rounded to the nearest dollar). (Assume bonds
are available for
sale.)
Instructions:
(a) Prepare the entry for May 1, 2010.
(b) The bonds are sold on August 1, 2011 for $425,000 plus
accrued
interest. Prepare all entries required to properly record the
sale. (Points : 30)
