OMPREHENSIVE PROBLEM 11-2, 11-3 cil-1 Financial Reporting of Bond Issuance and C
ID: 2561067 • Letter: O
Question
OMPREHENSIVE PROBLEM 11-2, 11-3 cil-1 Financial Reporting of Bond Issuance and Common Share Issuance, Repurchase, and Cash Dividends (Chapters 10 and 11) Americana Inc. reported the following shareholders'equity account balances on January 1,2014. Notes Payable (due 2017) Common Shares (1,000 issued) $10,000 1,000 Bonds Payable Retained Earnings 120,000 The company entered into the following transactions during 2014. Jan. 15 Feb. 15 Mar. 15 Issued 5,000 common shares for $50,000 cash. Reacquired and cancelled 3,000 common shares for $33,000 cash. Issued 2,000 common shares for $24,000 cash. Issued 600 common shares for $4,600 cash. Declared (but did not yet pay) a $1 cash dividend on each outstanding Sept. 15 common shares. Issued 100, 10-year, $1,000 bonds, at a quoted bond price of 101. Oct. 1 Required 1. Analyze the effects of each transaction on total assets, liabilities, and shareholders equity 2. Prepare journal entries to record each transaction. 3. Prepare the noncurrent liabilities and shareholders' equity sections of the balance sheet at December 31, 2014. At the end of 2014, the accounts reflected net income of $20,000Explanation / Answer
Effect on Date/S. N. Accounts Title & Explanation Debit Credit Total asset Liabilties Shareholder's equity Amount in $ Amount in $ Not given 10000 121000 Jan-15 Cash 50000 +50000 +50000 Common stock 5000 paid in capital in excess of stated value Common stock 45000 To record the issuance of common stock Feb-15 Treasury Stock 33000 -33000 -33000 Cash 33000 To record the reacquisition of common stock Mar-15 Cash 24000 +24000 +24000 Common stock 2000 paid in capital in excess of stated value Common stock 22000 To record the issuance of common stock Aug-15 Cash 4600 +4600 4600 Common stock 600 paid in capital in excess of stated value Common stock 4000 Sep-15 Retained earnings 5600 -5600 -5600 Dividend payable 5600 Oct-01 Cash 10100 +10100 +10100 Bonds Payable 10000 Premium on Bonds 100 Non Current Liabilities Notes Payable(Due 2017) 10000 Bonds Payable 10000 Premium on Bonds 100 Total Non current Liabilities 20100 Shareholder's Equity Common Shares 5600 outstnading 5600 paid in capital in excess of stated value Common stock 71000 Retained earnings 120000 Add : net Income 20000 Less : Cash dividend -5600 Total 211000 Less : Treasury Stock -33000 Total shareholder's Equity 178000
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