I need help with a Accounting question. All explanations and answers will be used to help me learn.

12. On July 15, Reagan, Inc. was incorporated and subsequently entered into a

subscription contract to sell 10,000 shares of $10 par common stock at a price of

$22/share. The contract requires a down payment of 10%, with the remaining

balance to be paid on October 1. The stock will be issued to each subscriber upon full

payment. Assume that no other transactions affected common stock during the year.

A total of 9,000 shares were paid for under the subscription agreement, and the

remaining 1,000 shares were sold to the market at $9/share on October 2.

What is the balance in the Common Stock account as of December 31?

A. $90,000

B. $99,000

C. $100,000

D. $193,000

E. $207,000

13. JFK Corporation has 10 executives to whom it grants compensatory stock options on

January 1, 2007. At that time, it grants each executive the right to purchase 1,000

shares of its $1 par value common stock at $12/share after a 4-year service period. UOG Courses-Examination

The value of each option is estimated to be $2.45 on the grant date. Based on its

average employee turnover rate each year, JFK expects that a total of 1 executive will

NOT vest in the plan.

If JFK does not change its assumptions, how much compensation expense will be

recognized during 2009?

A. $5,513

B. $16,539

C. $22,050

D. $30,000

E. $90,000

14. On January 1, 2008, Washington, Inc. issues 900 shares of $100 par convertible

preferred stock for $134/share. Each share of convertible preferred stock can be

converted into J. shares of $10 par value common stock.

If preferred shareholders convert 200 shares of preferred stock into common stock,

how much will Washington, Inc. record in the Common Stock account?

A. $0

B. $2,000

C. $6,000

D. $20,000

E. $26,800

15. 0n June 15, 2008, Jefferson Adams, Inc. had 15,000 shares of$5 par value common

stock issued and outstanding. These shares of common stock had originally been

issued for $12/share. The company had never repurchased or reissued any of the

issued an<l outstanding shares. However, during the year, the company engaged in

the following transactions:

Reacquired 2,000 shares of common stock for $41/share.

Reissued 1,000 shares of common stock for $43/share.

Assume that Jefferson Adams, Inc. uses the cost method to account for treasury

stock, and that no other transactions affected the contributed capital accounts during

the year.

At the end of the year, which of the following statements is NOT true?

A. Additional Paid in Capital – Treasury Stock will have a $2,000 balance.

B. Additional Paid in Capital – Common Stock will have a balance of $105,000.

C. Treasury Stock will have a balance of $41,000.

D. There were 15,000 shares of $5 par value common stock issued and

outstanding.

E. There is a balance of $75,000 in the Common Stock account.

16. At the beginning of the year, the Lincoln Logging Company had 10,000 shares of $1

par value common stock outstanding. During the year, it engaged in the following

transactions related to its common stock, so that at year end, it had 32,600 shares

outstanding:UOG Courses-Examination

March 30—Issued 2,300 shares of common stock

June 1 – Repurchased 3,100 shares of common stock

October 31 – Issued a 3 for 1 stock split, reducing the par value to $0.33/share

December 1 – Issued 5,000 shares of common stock

Compute the Lincoln Logging Company’s weighted average common shares

outstanding.

A. 25,858

B. 26,514

C. 27,600

D. 30,167

E. 32,600

17. The Roosevelt Car Company has determined that it will pay a total cash dividend of

$80,000. Roosevelt has 1,000 shares of 5%, $100 par, cumulative, non-participating

preferred stock with two years of dividends in arrears, currently selling for $131/share,

and 20,000 shares of no-par, no stated value common stock issued and outstanding,

currently selling for $15/share.

How much cash dividend will be paid on each share of common stock?

A. $3.02

B. $3.25

C. $3.50

D. $3.75

E. $4.00

18. The Coolidge Brewing Company has stockholder’s equity as follows:

Common Stock, $10 par $100,000

Additional Paid in Capital-Common Stock $230,000

Retained Earnings $316,450

Total Stockholder’s Equity $646,450

The company is considering issuing an 8% stock dividend. The current market price

of the company’s stock is $46/share.

If this dividend is declared and issued, which of the following statements is NOT true?

A. Contributed capital will be increased by $8,000.

B. Retained earnings will be reduced by $36,800.

C. Common stock will be increased by $8,000.

D. Additional Paid in Capital from Stock Dividends will be increased by $28,800.

E. 800 additional shares of common stock will be issued.

19. The following information pertains to the Garfield Company.

The company had net income of $150,000. The company had income from

continuing operations of $135,000 and income from extraordinary items of $15,000.

The company had 20,000 weighted average common shares outstanding during the

year. The company had 10,000 shares of 8%, $20 par, cumulative preferred stock

outstanding during the year, but no dividends were declared during the year.UOG Courses-Examination

The company MUST report:

A. Basic EPS for Net Income of $7 .50, Income from Continuing Operations of

$6.75, and Income from Extraordinary Items of $0.75

B. Basic EPS for Net Income of $6. 70, Income from Continuing Operations of $6.

75, and Income from Extraordinary Items of ($0.05)

C. Basic EPS for Net Income of $6. 70, Income from Continuing Operations of

$5.95, and Income from Extraordinary Items of $0.75

D. Basic EPS for Net Income of $7 .50, Income from Continuing Operations of

$5.95, and Income from Extraordinary Items of ($0.05)

E. Basic EPS for Net Income of $6. 70, Income from Continuing Operations of

$5.95, and Income from Extraordinary Items of ($0.05)

20. The van Buren Bureau Company has stockholder’s equity as follows:

Common Stock, $1 par $30,000

Additional Paid in Capital – Common Stock $210,000

Retained Earnings $149,837

Total Stockholder’s Equity $389,837

The company is considering issuing a 30% stock dividend. The current market price

of the company’s stock is $6/share.

If this dividend is declared and issued, which of the following statements is true?

A. Contributed capital will be increased by $54,000.

B. Retained earnings will be reduced by $54,000.

C. Contributed capital will be increased by $54,000.

D. Retained earnings will be reduced by $54,000.

E. All of the above answers are true.

Problems (2 Problems@ 40 points total): Answer all of the questions for each problem.

Show your work neatly so that you may receive partial credit for your work. In addition,

make sure that your final answer is clearly labeled, and that your answer is legible.

Problem 1 (25 points):

Carter Construction had net income of $350,000. They began the year with 25,000

common shares issued and outstanding. On June 30, they issued 10,000 additional

shares. There were no other transactions affecting common stock. The average market

price of the common stock during the year was $30/share. The market price of the

common stock at the end of the year was $34/share. The company’s marginal tax rate is

20%.

The following information pertains to securities issued by the company. Each security was

outstanding during the entire year.

1. 5,000 options to buy common stock with an exercise price of $28/share. In addition,

there is $4 of unrecognized compensation cost associated with each option.

2. 10,000 shares of 5%, $100 par, cumulative, non-convertible preferred stock with an

average market price of $105/share and an ending market price of $108/share.

3. 2,000 shares of 7%, $100 par, cumulative, convertible preferred stock with an UOG Courses-Examination

average market price of $109 and an ending market price of$107/share. Each share

of preferred stock is convertible into 5 shares of common stock.

4. 200 $1,000 bonds with a stated interest rate of 10%, convertible into 50 shares of

common stock, issued at 105. The premium is being amortized at the rate of

$500/year.

Compute Carter Construction’s Basic Earnings per Share (5 points):

Given the information that you have about the options, are they potentially dilutive? Why

or why not (3 points)?

Given the information that you have about the shares of the 5%, $100 par preferred stock,

are they potentially dilutive? Why or why not (3 points)?

Given the information you have about the shares of the 7%, $100 par preferred stock, are

they potentially dilutive? Why or why not (3 points)?

Given the information you have about the I 0% bonds, are they potentially dilutive? Why or

why not (3 points)?

Rank each potentially dilutive security, beginning with the most dilutive (2 points).

Compute diluted earnings per share (6 points).UOG Courses-Examination

Problem 2 (15 points):

On January 1, 2008, as a form of executive compensation, the Truman Company granted

share appreciation rights (SARs) to James Forrestal. These rights entitle Forrestal to

receive cash equal to the excess of the quoted market price over a $30 option price for

10,000 shares of the company’s common stock on the exercise date. The service period is

four years. Forrestal exercises his rights on December 31, 2011. The fair value per SAR

was:

12/31/2008: $7.25

12/31/2019: $3.75

12/31/2010: $5.50

12/31/2011: $4.60

The market price of the common stock was $34.60 on December 31, 2011.

Prepare a table that calculates and summarizes the expense AND ending liability

associated with the SARs for 2008 and 2009 (6 points).

Prepare the journal entry to record compensation expense for 2008 (3 points).

Prepare the entry to record compensation expense for 2009 (3 points).

What would the Truman Company’s balance in the SAR Payable account be as of

December 31, 2010 (3 points)?