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).)