Selected transactions completed by Equinox Products Inc. during the fiscal year

Question

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows:

Record on journal page 10:

Record on journal page 11:

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows:

Record on journal page 10:

Jan. 3 Issued 15,000 shares of $20 par common stock at $30, receiving cash. Feb. 15 Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash. May 1 Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. 16 Declared a dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. Journalize this transaction as a single entry. 26 Paid the cash dividends declared on May 16. Jun. 1 Purchased 7,500 shares of Solstice Corp. at $40 per share, plus a $150 brokerage commission. The investment is classified as an available-for-sale investment. 8 Purchased 8,000 shares of treasury common stock at $33 per share. 22 Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. 30 Declared a $1.00 cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock were outstanding. Jul. 11 Paid the cash dividends declared on Jul. 11 to the preferred stockholders. Aug. 27 Received $27,500 dividend from Pinkberry Co. investment of Jun. 22.

Record on journal page 11:

Oct. 1 Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of $375. The bonds are classified as a held-to-maturity long-term investment. 7 Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8. 14 Received a dividend of $0.60 per share from the Solstice Corp. investment on Jun. 1. 29 Sold 1,000 shares of Solstice Corp. at $45, including commission. 31 Recorded the payment of semiannual interest on the bonds issued on May 1 and the amortization of the premium for six months. The amortization is determined using the straight-line method. Dec. 31 Accrued interest for three months on the Dream Inc. bonds purchased on Oct. 1. 31 Pinkberry Co. recorded total earnings of $240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. 31 The fair value for Solstice Corp. stock was $39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero. Required: 1. Journalize the selected transactions. Refer to the Chart of Accounts for exact wording of account titles. 2. After all of the transactions for the year ended December 31, 2016, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc. A. Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.)* B. Prepare a retained earnings statement for the year ended December 31, 2016.* C. Prepare a balance sheet in report form as of December 31, 2016. * * Read the instructions above each financial statement carefully. They may contain specific instructions for completing the statement. Income Statement data: Advertising expense $ 150,000 Cost of merchandise sold 3,700,000 Delivery expense 30,000 Depreciation expense-office buildings and equipment 30,000 Depreciation expense-store buildings and equipment 100,000 Dividend revenue 4,500 Gain on sale of investments 4,980 Income from Pinkberry Co. investment 76,800 Income tax expense 140,500 Interest expense 21,000 Interest revenue 2,720 Miscellaneous administrative expense 7,500 Miscellaneous selling expense 14,000 Office rent expense 50,000 Office salaries expense 170,000 Office supplies expense 10,000 Sales 5,254,000 Sales commissions 185,000 Sales salaries expense 385,000 Store supplies expense 21,000 Retained earnings and balance sheet data: Accounts payable $ 194,300 Accounts receivable 545,000 Accumulated depreciation—office buildings and equipment 1,580,000 Accumulated depreciation—store buildings and equipment 4,126,000 Allowance for doubtful accounts 8,450 Available-for-sale investments (at cost) 260,130 Bonds payable, 5%, due 2024 500,000 Cash 246,000 Common stock, $20 par (400,000 shares authorized; 100,000 shares issued, 94,600 outstanding) 2,000,000 Dividends: Cash dividends for common stock 155,120 Cash dividends for preferred stock 100,000 Goodwill 500,000 Income tax payable 44,000 Interest receivable 1,125 Investment in Pinkberry Co. stock (equity method) 1,009,300 Investment in Dream Inc. bonds (long term) 90,000 Merchandise inventory (December 31, 2016), at lower of cost (FIFO) or market 778,000 Office buildings and equipment 4,320,000 Paid-in capital from sale of treasury stock 13,000 Excess of issue price over par: -Common 886,800 -Preferred 150,000 Preferred 5% stock, $80 par (30,000 shares authorized; 20,000 shares issued) 1,600,000 Premium on bonds payable 19,000 Prepaid expenses 27,400 Retained earnings, January 1, 2016 9,319,725 Store buildings and equipment 12,560,000 Treasury stock (5,400 shares of common stock at cost of $33 per share) 178,200 Unrealized gain (loss) on available-for-sale investments (6,500) Valuation allowance for available-for-sale investments (6,500)

Explanation / Answer

Account Title Dr Cr 3-Jan Cash (15000*30) $450,000 Common Stock 300000 Excess of issue price over par: Common Stock 150000 15-Feb Cash (4000*100) 400000 Preferred Stock 320000 Excess of issue price over par: Preferred Stock 80000 1-May Cash 520000 Bonds payable, 5% 500000 Premium on bonds payable 20000 16-May Retained Eranings 70000 dividends Payable for common stock 50000 dividends Payable for preferred stock 20000 26-May dividends Payable for common stock 50000 dividends Payable for preferred stock 20000 Cash dividends for common stock 50000 Cash dividends for preferred stock 20000 1-Jun Available sale of Investment (7500*40)+150) 300150 Cash 300150 8-Jun Tresuary Stock 264000 Cash 264000 22-Jun Investment in Pinkberry Co. stock (equity method) 960000 Cash 960000 11-Jul dividends Payable for preferred stock 20000 Cash dividends for Preferred stock 20000 27-Aug Cash 27500 Investment in Pinkberry Co. stock (equity method) 27500 1-Oct Investment in Dream Inc. bonds (long term) 90000 Interest Receivable 375 Cash 90375 7-Oct Cash 98800 Tresuary Stock (2600*33) 85800 Paid-in capital from sale of treasury stock (2600*(38-33) 13000 14-Oct Cash 4500 Dividend Revenue 4500 29-Oct Cash 45000 Available sale of Investment (1000*40)+150/7500*1000) 40020 Gain on sale of investment 4980 31-Oct Interset expense 1500 Premium on bonds payable-Amortization 20000/20 payments 1000 Cash 2500 31-Dec Interest Receivable 1125 Interest Income (90000*.05*3/12) 1125 31-Dec Investment in Pinkberry Co. stock (equity method) 76800 Income from Pinkberry Co. investment 76800 31-Dec Unrealized gain (loss) on available-for-sale investments 6500 Valuation allowance for available-for-sale investments 6500*(40.2-30.2) 6500 Multi Step Income Statement for the year ending 31 December 2016 Sales 5,254,000 Cost of merchandise sold 3,700,000 Gross Profit 1,554,000 Operating Expenses General expenses Selling, General & Administrative Expenses Selling expenses Advertising expense $150,000 Delivery expense 30,000 Miscellaneous selling expense 14,000 Sales commissions 185,000 Sales salaries expense 385,000 Administrative expenses Office rent expense 50,000 Store supplies expense 21,000 Office salaries expense 170,000 Office supplies expense 10,000 Depreciation expense-office buildings and equipment 30,000 Depreciation expense-store buildings and equipment 100,000 Miscellaneous administrative expense 7,500 $1,152,500 Operating Income $401,500 Other Income & Expenses Dividend revenue 4,500 Gain on sale of investments 4,980 Income from Pinkberry Co. investment 76,800 Interest expense -21,000 Interest revenue 2,720 Net Other Income & Expenses 68,000 Income Before tax $333,500 Income tax expense 140,500 Net Income $193,000 Preference Dividend 100000 Net Income availble to Common Stockholders $93,000 EPS $0.93 Dear student this qusetions has multipe parts still I have answered questin1 and 2

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