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Situation
You are the assistant accountant for Tyler Corporation. It is mid-January 2020 and you are helping to prepare Tyler’s
Directions
Research the related generally accepted accounting principles and prepare a short memo to the head accountant that explains how Tyler should report the $100,000 note payable on its December 31, 2019, balance sheet.
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Chapter 4 Solutions
EBK INTERMEDIATE ACCOUNTING: REPORTING
- During the course of your audit, you came across with the following information. STAR Company purchased 10,000 shares of MOON Corporation ordinary shares at P90 share on January 3, 2019. On December 31, 2019, STAR received 2,000 shares of MOON ordinary shares in lieu of cash divicend of 10 per share. On this date, the MOON ordinary share has a quoted market price of P60 per share. In its 2019 statement of comprehensive income. How much should STAR Company report as dividend income?arrow_forwardthe dusty corporation began business on January 1, 2020. the corporate charter authorizes issuance of 100,000 shares of .01 par value common stock and 10,000 shares of $1 par value, 10% cumulative preferred stock. on july 1, 2020, dusty issued 30,000 shares of common stock in exchange for three years of rent on a retail location. the cash rental price is $4,200 per month and the rental period begins july 1. How should dusty adjust its financial statement for the issuance of the shares on July 1?arrow_forwardYou were assigned to audit the shareholders’ equity of Glory Inc. for the year ended December31, 2019. Glory Corp. was incorporated in early 2018 when it was authorized by SEC to issue 500,000 ordinary shares (P10 par) and 100,000 convertible preference shares (P20 par). The following schedule reflects the company’s capital balances as of December 31, 2018: Ordinary shares, 100,000 shares issued during the company’s P 1,400,000 incorporation in exchange of a land with a fair value of P1.4 M. Preference shares, 50,000 shares issued during the company’s 2,500,000 incorporation at P50 per share. Each preference share is convertible to four ordinary shares Retained earnings, which is the company’s net income in 2018 540,000 Total shareholders’ equity P 3,440,000 Your inquiries and investigation revealed the following transactions, which occurred in 2019: a. On January 15, the company reacquired 20, 000 ordinary shares (from the 2018 issue) at P22 per share and reverted them to treasury…arrow_forward
- Hi, I need help making a journal entry. Sept. 1 ,2019: Joe issued himself 5,000 shares of Tucker Boats, Inc common stock (no par) at a price of $20 per share. Joe transferred $100,000 cash from his personal bank account and deposited it in a checking account in the name of Tucker Boars Inc. Sept. 28,2019: Joe and his wife, who are vice-president of Tucker Boats, constitute the board of directors. They met and declared a $.30 per share cash dividend, to be paid on March 15, 2014. Would there be a journal entry for Sept. 28, 2019? If so, what would it look like?arrow_forwardRay Holt Corporation has retained you as a consultant on accounting policies and procedures. During 2019, the company engaged in a number of treasury stock transactions, having foreseen an opportunity to report its treasury stock as an asset and to recognize a profit in trading its own stock. The transactions were as follows: 1. Reacquired 120 shares of its $10 par common stock at $20 per share. The shares had originally been issued at $20 per share. 2. Reacquired 165 shares of its $10 par common stock at $23 per share. The shares had originally been issued at $20 per share. 3. Reacquired 45 shares of its $100 par preferred stock at $138 per share. The shares had originally been issued at $185 per share. 4. Sold all common treasury shares held at $27 per share. 5. Reacquired 160 shares of its $100 par preferred stock at $135 per share. The shares had originally been issued at $185 per share. 6. Retired all preferred shares held in the treasury. Required: 1. Next…arrow_forwardPREPARE JOURNAL ENTRIES AND T-ACCOUNTS PROBLEM 1: You were assigned to audit the shareholders’ equity of Glory Inc. for the year endedDecember31, 2019. Glory Corp. was incorporated in early 2018 when it was authorized by SEC to issue500,000 ordinary shares (P10 par) and 100,000 convertible preference shares (P20 par). The followingschedule reflects the company’s capital balances as of December 31, 2018:Ordinary shares, 100,000 shares issued during the company’s P 1,400,000incorporation in exchange of a land with a fair value of P1.4 M.Preference shares, 50,000 shares issued during the company’s 2,500,000incorporation at P50 per share. Each preference share is convertibleto four ordinary sharesRetained earnings, which is the company’s net income in 2018 540,000Total shareholders’ equity P 3,440,000Your inquiries and investigation revealed the following transactions, which occurred in 2019:a. On January 15, the company reacquired 20, 000 ordinary shares (from the 2018 issue) at P22…arrow_forward
- During your examination of the financial statements of Venus Corporation for the year ended December 31, 2020, you found a new account called "Investments." Your examination revealed that during 2020, Venus began a program of investments, and all investment-related transactions were entered in this account. Your analysis of this account for 2020 follows: VENUS CORPORATION Analysis of Investments Year Ended December 31, 2020 Date—2020 (i) Jupiter Ltd. Common Shares Feb. 14 Purchased 3,000 shares @ $ 55 per share $ 165,000 DR Jul. 26 Received 300 Jupiter common shares as a stock dividend. (Memorandum entry) Sep. 28 Sold the 300 Jupiter common shares received July 26 @ $ 70 per share $ 21,000 Credit (ii) Mars Ltd. Common Shares Apr. 30 Purchased 5,000 shares @ $ 40 per…arrow_forwardSoutheast Bank invests in equity securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2019, the bank held as an investment in equity securities 220 shares of Eglan Company common stock that originally cost $5,940. At that time, these securities had a fair value of $5,720. During the fourth quarter, the bank engaged in the following transactions: Oct. 26 Purchased 340 shares of Farrell Company common stock for $34 per share. Nov. 26 Sold 220 shares of Eglan common stock for $25 per share. Dec. 10 Purchased 390 shares of Gray Company common stock for $43 per share. On December 31, 2019, the quoted market prices of the shares were as follows: Eglan Company, $56 per share; Farrell Company, $38 per share; and Gray Company, $42 per share. Required: 1. Prepare journal entries to record the preceding information for the fourth quarter. 2. Show what the bank reports on its fourth quarter 2019 income statement for these equity…arrow_forwardYou are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…arrow_forward
- You are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…arrow_forwardPrepare entries to record the following transactions of Garcia Company. 2019 Jan. 1 Purchased 400 shares of Lopez Co. common stock for $3,000 cash. Lopez has 1,000 shares of common stock outstanding, and its policies will be significantly influenced by Garcia. Aug. 1 Lopez declared and paid a cash dividend of $2 per share. Dec. 31 Lopez reported net income for the year of $2,500. 2020 Aug. 1 Lopez declared and paid a cash dividend of $2.25 per share. Dec. 31 Lopez reported net income for the year of $2,750. 2021 Jan. 1 Garcia sold 100 shares of Lopez for $1,300 cash.arrow_forwardThe controller of Red Lake Corporation has requested assistance in determining income, basic earnings per share, and diluted earnings per share for presentation on the companys income statement for the year ended September 30, 2020. As currently calculated, Red Lakes net income is 540,000 for fiscal year 2019-2020. Your working papers disclose the following opening balances and transactions in the companys capital stock accounts during the year: 1. Common stock (at October 1, 2019, stated value 10, authorized 300,000 shares; effective December 1, 2019, stated value 5, authorized 600,000 shares): Balance, October 1, 2019issued and outstanding 60,000 shares December 1, 201960,000 shares issued in a 2-for-l stock split December 1, 2019280,000 shares (stated value 5) issued at 39 per share 2. Treasury stockcommon: March 3, 2020purchased 40,000 shares at 38 per share April 1, 2020sold 40,000 shares at 40 per share 3. Noncompensatory stock purchase warrants, Series A (initially, each warrant was exchangeable with 60 for 1 common share; effective December 1, 2019, each warrant became exchangeable for 2 common shares at 30 per share): October 1, 201925,000 warrants issued at 6 each 4. Noncompensatory stock purchase warrants, Series B (each warrant is exchangeable with 40 for 1 common share): April 1, 202020,000 warrants authorized and issued at 10 each 5. First mortgage bonds, 5%, due 2029 (nonconvertible; priced to yield 5% when issued): Balance October 1, 2019authorized, issued, and outstandingthe face value of 1,400,000 6. Convertible debentures, 7%, due 2036 (initially, each 1,000 bond was convertible at any time until maturity into 20 common shares; effective December 1, 2019, the conversion rate became 40 shares for each bond): October 1, 2019authorized and issued at their face value (no premium or discount) of 2,400,000 The following table shows the average market prices for the companys securities during 2019-2020: Adjusted for stock split Required: Prepare a schedule computing: 1. the basic earnings per share 2. the diluted earnings per share that should be presented on Red Lakes income statement for the year ended September 30, 2020 A supporting schedule computing the numbers of shares to be used in these computations should also be prepared. Assume an income tax rate of 30%.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningIndividual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
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