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problem1)

Glaser Services acquired 30% of the outstanding common stock of Nickels Company on January 1, 2008, by paying $864,180 for the 48,010 shares. Nickels declared and paid $0.50 per share cash dividends on March 15, June 15, September 15, and December 15, 2008. Nickels reported net income of $337,500 for the year. At December 31, 2008, the market price of Nickels common stock was $26 per share.

a) Make the journal entries for Glaser Services for 2008 assuming Glaser cannot exercise significant influence over Nickels. (Utilize the cost method and suppose that Nickels common stock must be classified as a trading security.)

b) Make the journal entries for Glaser Services for 2008, assuming Glaser could exercise significant influence over Nickels. Utilize equity method.

problem2)

On January 1, 2010, Yadier Inc. had following stockholders' equity account balances.

Common Stock, no-par value (549,000 shares issued)    $2,745,000

Common Stock Dividends Distributable                              248,000

Retained Earnings                                                            637,000

During 2010, the following transactions and events occurred.

1. Issued 60,390 shares of common stock as a result of a 11 % stock dividend declared on December 15, 2009.

2. Issued 34,000 shares of common stock for cash at $6 per share.

3. Corrected an error that had understated the net income for 2008 by $71,000.

4. Declared and paid a cash dividend of $82,000.

5. Earned net income of $311,000.

Instructions

Make the stockholders' equity section of th balance sheet at December 31, 2010.

problem3)

Condensed financial data of Arma Inc. follow.
ARMA INC.
Comparative Balance Sheets
December 31

Assets                                                                  2010            2009
Cash                                                                  $ 89,698         $ 48,775
Accounts receivable                                                92,105          33,075
Inventories                                                          111,682         101,445
Prepaid expenses                                                   28,666          25,823
Investments                                                        138,310         114,847
Plant assets                                                         269,072         241,462
Accumulated depreciation                                     (49,221)         (51,996)
     Total                                                             $680,312         $513,431

Liabilities and Stockholders' Equity          
Accounts payable                                               $111,938         $ 67,029
Accrued expenses payable                                     16,297            17,388
Bonds payable                                                     120,530         149,070
Common stock                                                    219,380         175,080
Retained earnings                                                212,167         104,864
     Total                                                             $680,312         $513,431

ARMA INC.
Income Statement
For the Year Ended December 31, 2010
Sales                                                                                       $392,246
Less:               
   Cost of goods sold                                         $134,290          
   Operating expenses, excluding depreciation         11,729          
   Depreciation expense                                        46,322          
   Income taxes                                                   26,970          
   Interest expense                                                4,692          
   Loss on sale of plant assets                                6,711           230,714
Net income                                                                             $161,532

Additional information:

1. New plant assets costing $84,600 were purchased for cash during the year.

2. Old plant assets having an original cost of $56,990 were sold for $1,182 cash.

3.  Bonds matured and were paid off at face value for cash.

4. Cash dividend of $54,229 was declared and paid during the year.

Instructions

Make a statement of cash flows using indirect method. (Name multiple entries with positive cash flow first and then negative cash flow. Name amounts from largest to smallest like, 10, 5, 3, 2. If amount decreases cash flow, use either the negative sign preceding the number like, -45 or parentheses like (45).)

Accounting Basics, Accounting

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  • Reference No.:- M91754

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