Question -

Q1. On May 1, 2013 Green Corp issued $1,000,000 of 12% bonds, dated January 1, 2013, for $975,000 plus accrued interest. The bonds mature on Dec 3, 2027, and pay interest semiannually on June 30 and December 31. Green's fiscal year ends on December 31 each year.

Instructions:

1. Determine the amount of accrued interest that was included in the proceeds received from the bond sale. (Show calculations)

2. Prepare the journal entry for the issuance of the bonds.

Q2. On January 1, 2013, Shamu Corporation had 100,000 shares of common stock outstanding. The following transactions occurred during 2013:

March 1: Reacquired 3,000 shares, accounted for as treasury stock

Sep 30: Sold all the treasury shares

Dec 1: Sold 12,000 new shares for cash

Dec 31: Reported a net income of $198,500

The following transactions occurred during 2014:

Jan 10: Declared and issued a 25% stock dividend

Dec 31: Reported a net income of $268,800

Instructions: Calculate Shamu's basic earning per share (rounded to 2 decimal places) for both years for presentation in comparative financial statements that will be prepared at the end of 2014.

Q3. In 2012, Mordica Co. issued 300,000 of its 500,000 authorized shares of $10 par value common stock at $35 per share. In January, 2013, Mordican repurchased 20,000 shares at $30 per share. Assume these are the only stock transactions the company ever had.

Instructions:

1. What are the two methods of accounting for treasury stock?

2. Prepare the journal entry to record the purchase of treasury stock by the cost method.

3. 7,000 shares of treasury stock are reissued at $33 per share. Prepare the journal entry to record the reissuance by the cost method.