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il63 [147K]
3 years ago
6

Todd Corporation sold 4 million of its $1 par common shares at $6 per share. The company received net proceeds from the public o

ffering of $23,600,000, after deducting legal, promotional, and accounting services necessary to effect the sale. Prepare the appropriate journal entry for the sale of the stock. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Business
1 answer:
Lera25 [3.4K]3 years ago
8 0

Answer:

The journal entry for sale of the stock is shown below:

Explanation:

Cash A/c................................................................................Dr       $23,600,000

      Common Stock A/c....................................................................Cr     $4,000,000

      Paid in Capital in Excess of Par: Common Stock A/c.........Cr    $19,600,000

As the common stock are issued.

Stock Issue Expense A/c............Dr    $4,000,000

          Cash A/c...................................Cr   $4,000,000

As stock issue expense is incurred.

Working Note:

Common Stock = Number of stock sold × Par Value

= 4,000,000 × $1

= $4,000,000

Paid in Capital in Excess of Par: Common Stock = Amount received - Common Stock

= $23,600,000 - $4,000,000

= $19,600,000

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Phips Co. purchases 100 percent of Sips Company on January 1, 20X2, when Phips' retained earnings balance is $320,000 and Sips'
Taya2010 [7]

Answer:

Phips' post-closing retained earnings balance on December 31, 20X2 = $577,000

Explanation:

Note: When 100% shares of a company is acquired it is treated as subsidiary and for its accounting equity method is used.

In that case all balances of subsidiary are added to balances of Parent company.

But if any dividend is received then such value is deducted from carrying value of investment, and any share in profit will be added to carrying value.

All the retained earnings balance is accumulated together of both companies.

Therefore closing balance shall be

Retained earnings balance of Sips at year end

= $120,000 + $20,000 - $8,000 = $132,000

Year end balance of Phips Alone

= $320,000 + 125,000 = $445,000

Total Retained Earnings at year end = $132,000 + $445,000 = $577,000

3 0
3 years ago
Which of the following statements, if any, represent a principal’s duty to an agent who works on a commission basis?
saul85 [17]

Answer:

a) The principal is required to maintain pertinent records and pay the agent according to the terms of their agreement.

Explanation:

The relationship between agent and principle is agreement based and differs from other agent-principle relationships.

Commission will be paid to agent as per their agreement.

4 0
3 years ago
Holly's is currently an all-equity firm that has 12,000 shares of stock outstanding at a market price of $36 a share. The firm h
vagabundo [1.1K]

Answer:

$31,104

Explanation:

EBIT / 12,000

= [EBIT - ($120,000 × .072)] / [12,000 - ($120,000 / $36)]

EBIT = $31,104

Therefore the minimum level of earnings before interest and taxes that the firm is expecting will be $31,104

8 0
3 years ago
In a traditional economy decisions are based largely on
Luden [163]
Custom

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3 years ago
Bob and Sally are married, file a joint tax return, report AGI of $120,000, and have two children. Del is beginning her freshman
ch4aika [34]

Answer:

B) $5,000

Explanation:

Bob and Sally can claim an American Opportunity (AO) credit for both of their children, Del and Owen.

Del's AO credit is $2,500 (100% of  the initial $2,000 qualifying expenses and 25% of the next $2,000 qualifying expenses).

Owen's AO credit is the same as Del's, $2,500.

The total American Opportunity credit claimed is $5,000 ($2,500 + $2,500)

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3 years ago
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