Assignment
Start by reading and following these instructions:
1. Quickly skim the questions or assignment below and the assignment rubric to help you focus.
2. Read the required chapter(s) of the textbook. Some answers may require you to do additional research on the Internet or in other reference sources. Choose your sources carefully.
3. Consider the discussion and the any insights you gained from it.
4. Produce the Assignment submission in a single Microsoft Word or Open Office document. Be sure to cite your sources, use APA style as required, check your spelling.
Task:
1. Open Kellogg's 2010 Annual Report and find paragraph entitled "property" under ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, and explain what the term impairment means.
2. Journalize the following transactions for the Round Company for 201X and show all calculations:
Jan. 1 Sold a truck for $1,300 that cost $6,700 and had accumulated depreciation of $6,000.
Feb 10 A machine costing $3,100 with accumulated depreciation of $2,150 was destroyed in a fire. The insurance company settled the claim for $450.
May 1 Traded in a machine costing $18,000 with $14,500 of accumulated depreciation for a new machine costing $25,100 with a trade-in allowance of $3,000. Note that depreciation is up-to-date. The loss is to be recognized.
July 8 Traded in a machine costing $46,000 with $34,000 of accumulated depreciation (which is up-to-date) for a new machine for a cash price of $47,000 and a trade-in allowance of $15,000.
Aug. 9 Journalize the May 1 transaction using the income tax method.
Sept. 12 A truck costing $7,500 and fully depreciated was disposed of.
3. Record the following transactions in the general journal of White Company for 201X:
Feb. 5 Purchased land for $93,000. The $93,000 included attorney's fees of $6,300.
Feb. 18 White Company decided to pave the parking lot for $5,400.
Mar. 24 Purchased a building for $91,000, putting down 34% and mortgaging the remainder.
Mar. 29 Bought equipment for $36,000. Freight and assembly were an additional $3,600.
May 10 Added a new wing for $160,000 to building that was purchased on March 24.
June 15 Performed ordinary repair work on equipment purchased March 29, $850, to maintain its normal operations.
July 1 Bought a truck for $14,500.
Oct. 15 Added a hydraulic loader to truck, $2,300.
Nov. 30 Truck purchased in July was brought in for grease and oil, $32.
Dec. 30 Overhauled truck's motor for $900, extending its life by more than one year.
Dec. 31 Changed tires on truck, $400.
4. At the beginning of January 201X, the stockholders' equity of Mountain View Corporation consisted of the following:
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Paid-In Capital
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Common Stock, $30 par value, authorized 60,000 shares, 15,000 shares issued and outstanding
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$450,000
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Paid-In Capital in Excess of Par Value - Common
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80,000
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Total Paid-In Capital by Common
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Stockholders
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$530,000
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Retained Earning
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170,000
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Total Stockholders' Equity
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$700,000
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Figure 4
1. Record the transactions in general journal form.
2. Prepare the stockholders' equity section at year-end using the Blueprint as a guide.
3. Prepare a statement of retained earnings at December 31, 201X. Accounts are provided in the working papers that accompany this text. Be sure to put in the beginning balances.
June 5 Mountain View Corporation purchased 1,000 shares of treasury stock at $34.
June 25 The board of directors voted a $0.20 per share cash dividend payable on July 20 to stockholders of record on July 4.
July 20 Cash dividend declared on June 25 is paid.
Sept. 10 Sold 300 shares of the treasury stock at $43 per share.
Sept. 30 Sold 700 shares of the treasury stock at $33 per share.
Oct. 15 The board of directors declared a 10% stock dividend distributable on January 2 to stockholders of record on November 2. The market value of the stock is currently $50 per share.
Dec. 31 Closed the net income of $70,000 in the Income Summary account to Retained Earnings.
5. The following is the stockholders' equity of Piesco Corporation on October 1, 201X:
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Paid-In Capital
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Preferred 17% Stock, $11 par value, authorized 6,300 shares, shares, 3,300 shares issued and outstanding
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$36,300
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Common Stock, $8 par value, authorized 24,000 shares,
10,000 shares issued and outstanding
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80,000
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Additional Paid-In Capital
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Paid-In Capital in Excess of Par Value - Preferred
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$10,000
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Paid-In Capital in Excess of Par Value - Common
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7,000
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Paid-In Capital in Excess of Par Value - Stock Dividend
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2,500
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Total Additional Paid-In Capital
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19,500
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Total Paid-In Capital
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$135,800
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Retained Earnings
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180,000
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Total Stockholders' Equity
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$315,800
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Figure 5
1. Journalize the transactions in general journal form.
2. Prepare the stockholders' equity section of the balance sheet using the legal capital approach as of December 31, 201X.
The working papers that accompany this text have accounts to update ledger balances. Be sure to put in the beginning balances. Use the Blueprint as a guide to the setup of stockholders' equity.
Oct. 3 Declared a $0.50 per shared dividend on the common stock and a $1.20 per share dividend on the preferred. (The Dividends Payable account will record amounts for both common and preferred, although companies could set up Common Dividend Payable and Preferred Dividend Payable accounts.)
Nov. 15 Dividends were paid that were declared on October 3.
Nov. 18 Purchased 340 shares of its own common stock at $14 per share.
Nov. 25 Reissued 90 shares at $17 per shared.
Nov. 26 Declared a 15% stock dividend on common. Market value of stock is $48 per share.
Dec. 29 Distributed stock dividend declared on November 26.
Dec. 30 Reissued 80 shares of treasury stock at $12 per share.
Dec. 31 Closed the Income Summary account, which had net income of $89,000, to Retained Earnings.