ACCT 2110 extra credit assignment Problem 1 (10 points) On December 1, 2017, Gil

Question

ACCT 2110 extra credit assignment Problem 1 (10 points) On December 1, 2017, Gilman Corporation borrowed $30,000 on a three month, 6% note payable. All payments are due on March 1, 2018. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note. Problem 2 (10 points) The following data is available for Blaine Corporation at December 31, 2017: Common stock, par $6 (authorized 40,000 shares) Paid-in Capital In Excess Of Par Retained earnings Treasury Stock (at cost $15 per share) $24,000 220,000 39,000 60,000 (a) How many shares have been issued? (b) At what price were the shares issued? (c) How many shares of its own stock has Blaine bought? (d) How many shares are outstanding? (e) How much is total stockholders' equity?

Explanation / Answer

PROBLEM 1: 1-Dec-17 Cash $   30,000 Note payable $    30,000 (To record borrowing against note payable) 31-Dec-17 Interest expense (30000*6%*1/12) $         150 Interest payable $          150 (To accrue interest expense for 1 month) 1-Mar-18 Interest expense (30000*6%*2/12) $         300 Interest payable $         150 Note payable $   30,000 Cash $    30,450 (To record payments on maturity of the note) PROBLEM 2: a) Number of shares issued = 24000/6 = 4,000 shares b) Price at which issued = (24000+220000)/4000 = $      61.00 c) Number of own shares bought = 60000/15 = 4000 d) Number of shares outstanding = 4000-4000 = 0 e) Stockholders' equity = 24000+220000+39000-60000 = $ 223,000

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