problem 1) prepare detailed note on the following:

(a) Donated capital   

(b)  Stock split

(c) Continued operations   

(e) Preferred stock

problem 2) Bar Harbor Gas and Electric obtained authorization to issue 90 million face values of 10%, 20 year bonds, dated May 1, 2001. Interest payment dates were November 1, and May 1. Issuance of the bonds didn’t take place until August 1, 2001. On this date all the bonds were sold at a price of 100 plus three months accrued interest.
Instructions:

Create the essential entries in general Journal form on:

(a) August 1, 2001, to record the issuance of bonds.

(b) November 1, 2001, to record the first semi-annual interest payment on the bond issue.

(c) December 1, 2001, to accrue bond interest expense through year end.

(d) May 1, 2002, to record the second semi-annual interest payment.

problem 3) Income statement data for Star Corporation is:

                                     2002            2003
Sales                         Rs.1400       Rs.1200
Cost of sales                    850             730
Selling expenses               205             240
General expenses             140             100
Income tax expense           82               50

Create the income statement in comparative form, setting each item for both years as percent of sales (vertical common size analysis) and comment on the findings.

problem 4)(a) What is the significance of Cash Flow Statement?

(b) Operating cash flow per share is better indicator of profitability than is EPS. Do you agree? Describe in detail.

problem 5) describe the different ways of combining the businesses and the accounting procedures followed in this regard.