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No.
Account Titles and Explanation
Debit
Credit
1.
2.
3.
4.
5.
6.
For options exercised:
For options lapsed:
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Martino Inc.
Balance Sheet
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The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below.Common stock, $10 par value, authorized 1,198,000 shares, 379,000 shares issued and outstanding $3,790,000 Paid-in capital in excess of par—common stock 661,000 Retained earnings 654,000
During the current year, the following transactions occurred.
1. The company issued to the stockholders 198,000 rights. Ten rights are needed to buy one share of stock at $33. The rights were void after 30 days. The market price of the stock at this time was $35 per share. 2. The company sold to the public a $232,000, 10% bond issue at 106. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $31 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $10. 3. All but 9,900 of the rights issued in (1) were exercised in 30 days. 4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing. 5. During the current year, the company granted stock options for 10,200 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $31. The options were to expire at year-end and were considered compensation for the current year. 6. All but 1,020 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract.
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Prepare general journal entries for the current year to record the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)No.
Account Titles and Explanation
Debit
Credit
1.
2.
3.
4.
5.
6.
For options exercised:
For options lapsed:
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Prepare the stockholders’ equity section of the balance sheet at the end of the current year. Assume that retained earnings at the end of the current year is $762,000.Martino Inc.
Balance Sheet
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesPaid-in CapitalProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesPaid-in CapitalProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
$
$
Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Paid-in Capital Property, Plant and Equipment Stockholders' Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity
$
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Copyright © 2000-2016 by John Wiley & Sons, Inc. or related companies. All rights reserved.Explanation / Answer
journal entries:
1)No entry required
2) DR CAsh (232,000*1.06) $245,920
DR Discount on bonds payble 9,280
CR To bonds paayble $232,000
To Paid in capital - Stock warrants 23,300
Allocated to bonds:
$96/106*245,920 = $222,720
Discount = $232,000 - $222,720 = $9,280
Allocated to warrants:
$10/106 * 245,920 = $23,200
3) DR CAsh $620,730
CR To Common stock (18,810 *10) $188,100
to Paid in excess of par 432,630
(198,000 - 9,900 rights exercised) / 10 righte share)*33= $620,730
4)DR Paid in capital - Stock warrants (23,200@80%) $18560
Cash 57,356
CR To Common Stock (1856 *10) $18,560
To paid in capital in excess of par 57,356
.80 *232,000/100per bond = 1856
warrant excercised 1856 *31 = $57,536
5) Compesnation expense $102,000
CR To paid in capital Stock option $102,000
(10,200*10)
6) DR Cash (9180*31) $284,580
Paid in capital - Stock options 91,800
CR To Common stock (9180 *10) $91,800
To Paid in capital in excess of par 284,500
For opetions lapsed:
Dr paid in capital stock option 10,200
CR to compensation expense $10,200
Stockholder's Equity
issued and outstanding 399,936 *10 3,999,360
Paid in excess of par 1,435,566
Paid in captial - Stock warants 23,200
Retained earnings 762,000
total stockholder's Equity $6,220,126
1)No entry required
2) DR CAsh (232,000*1.06) $245,920
DR Discount on bonds payble 9,280
CR To bonds paayble $232,000
To Paid in capital - Stock warrants 23,300
Allocated to bonds:
$96/106*245,920 = $222,720
Discount = $232,000 - $222,720 = $9,280
Allocated to warrants:
$10/106 * 245,920 = $23,200
3) DR CAsh $620,730
CR To Common stock (18,810 *10) $188,100
to Paid in excess of par 432,630
(198,000 - 9,900 rights exercised) / 10 righte share)*33= $620,730
4)DR Paid in capital - Stock warrants (23,200@80%) $18560
Cash 57,356
CR To Common Stock (1856 *10) $18,560
To paid in capital in excess of par 57,356
.80 *232,000/100per bond = 1856
warrant excercised 1856 *31 = $57,536
5) Compesnation expense $102,000
CR To paid in capital Stock option $102,000
(10,200*10)
6) DR Cash (9180*31) $284,580
Paid in capital - Stock options 91,800
CR To Common stock (9180 *10) $91,800
To Paid in capital in excess of par 284,500
For opetions lapsed:
Dr paid in capital stock option 10,200
CR to compensation expense $10,200
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