FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The
| Common stock, $10 par value, authorized 1,043,000 shares, 321,000 shares issued and outstanding | $3,210,000 | |
| Paid-in capital in excess of par—common stock | 562,000 | |
| 624,000 |
During the current year, the following transactions occurred.
| 1. | The company issued to the stockholders 109,000 rights. Ten rights are needed to buy one share of stock at $30. The rights were void after 30 days. The market price of the stock at this time was $32 per share. | |
| 2. | The company sold to the public a $204,000, 10% bond issue at 104. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $28 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8. | |
| 3. | All but 5,450 of the rights issued in (1) were exercised in 30 days. | |
| 4. | At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing. | |
| 5. | During the current year, the company granted stock options for 10,800 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $28. The options were to expire at year-end and were considered compensation for the current year. | |
| 6. | All but 1,080 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract. |
Transcribed Image Text:No. Account Titles and Explanation
Debit
Credit
1.
No Erery
No Erery
2.
Cash
212160
Dlacount on Bond Payable
Bordi Payable
20000
Pald-n Capital-Sock Warranta
16320
3.
Cash
Commen Seack
Paldin Capital in Eces of Par- Common Seock
207100
4.
Pald-in Captal-Sock Warranta
13056
Cash
4596
Common Sock
16320
Pald-in Capital in bcess of Par- Common Stock
42432
5.
Compenation Eperee
108000
Pald-in Capial-Sock Oprions
108000
6. For oetions eercised
Cah
2720
Pald-n Capltal-Shock Opelone
97200
Common Sock
97200
Pald-in Capltal in Ecess of Par- Common Stock
272140
Eor entions leand
Pald-in Caphal-Sock Opelone
10800
Compensatlon bperse
10800
Transcribed Image Text:(b)
Prepare the stockholders' equity section of the balance sheet at the end of the current year. Assume that retained earnings at the
end of the current year is $771,000.
Sheridan Inc.
Balance Sheet
%24
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