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Comprehensive Problem 4 Part 1: Journalize Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012,...
Comprehensive Problem 4Part 1: JournalizeSelected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows:1. Journalize the selected transactions.If no entry is required, select "No Entry Required" from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Issued 12,500 shares of $25 par common stock at $32, receiving cash.Description Debit Credit b. Issued 2,000 shares of $100 par preferred 5% stock at $105, receiving cash.Description Debit Credit c. Issued $400,000 of 10-year, 6% bonds at 105, with interest payable semiannually.Description Debit Credit d. Declared a quarterly dividend of $0.45 per share on common stock and $1.25 per share on preferred stock. On the date of record, 85,000 shares of common stock were outstanding, no treasury shares were held, and 17,000 shares of preferred stock were outstanding.Description Debit Credit e. Paid the cash dividends declared in (d).Description Debit Credit f. Purchased 5,500 shares of Kress Corp. at $22 per share, plus a $275 brokerage commission. The investment is classified as an available-for-sale investment.Description Debit Credit g. Purchased 6,500 shares of treasury common stock at $35 per share.Description Debit Credit h. Purchased 36,000 shares of Lifecare Co. stock directly from the founders for $18 per share. Lifecare has 112,500 shares issued and outstanding. Everyday Products Inc. treated the investment as an equity method investment.Description Debit Credit i. Declared a 2% stock dividend on common stock and a $1.25 quarterly cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $40 per share. On the date of record, 85,000 shares of common stock had been issued, 6,500 shares of treasury common stock were held, and 17,000 shares of preferred stock had been issued.Description Debit Credit j. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders.Description Debit Credit k. Received $24,500 dividend from Lifecare Co. investment in (h).Description Debit Credit l. Purchased $62,000 of Nordic Wear Inc. 10-year, 6% bonds, directly from the issuing company at par value, plus accrued interest of $550. The bonds are classifed as a held-to-maturity long-term investment.Description Debit Credit m. Sold, at $42 per share, 2,600 shares of treasury common stock purchased in (g).Description Debit Credit n. Received a dividend of $0.65 per share from the Kress Corp. investment in (f).Description Debit Credit o. Sold 500 shares of Kress Corp. at $26.50, including commission.Description Debit Credit p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization was determined using the straight-line method.Description Debit Credit q. Accrued interest for three months on the Nordic Wear Inc. bonds purchased in (l).Description Debit Credit r. Lifecare Co. recorded total earnings of $205,000. Everyday Products recorded equity earnings for its share of Lifecare Co. net income.Description Debit Credit s. The fair value for Kress Corp. stock was $18.50 per share on December 31, 2012. 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.Description Debit Credit
