In this scenario, you are presented with the company’s financial records. This activity requires vigilance and a keen eye for details which is crucial as the information presented will challenge your ability to use good reasoning and critical thinking to analyze the financial data presented. You are required to only use the figures in line with your surname initial which is D. . Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Requirements: Answer the following questions for Steve. d. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? e. Is it true or false that all forms and classes of stock carry voting rights? f. Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?
In this scenario, you are presented with the company’s financial records. This activity requires vigilance and a keen eye for details which is crucial as the information presented will challenge your ability to use good reasoning and critical thinking to analyze the financial data presented. You are required to only use the figures in line with your surname initial which is D. .
Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a
Requirements:
- Answer the following questions for Steve.
d. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock?
e. Is it true or false that all forms and classes of stock carry voting rights?
f. Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?
2.
The company is desirous of comparing serval financial transactions and possible outcomes to assist in guiding its decision-making process. It is assumed that the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. They have asked each student from your accounting course to prepare the company’s
- Issued ________shares of common stock. Stock has par value of ___ per share and was issued at $____ per share. (please refer to table below and use only the info in line with your surname initial in the blank/underlined space)
Surname |
# of shares issued |
Per value |
Issue price |
A, P, I, E, V |
5,000 |
0.01 |
30.00 |
C, O R, Y |
15,000 |
0.10 |
30.00 |
K, Q, M, F |
45,500 |
0.30 |
30.00 |
S, W, G, Z |
65,000 |
0.40 |
30.00 |
D, T, L, U |
80,000 |
0.50 |
30.00 |
N, B J, X, H |
100,000 |
0.60 |
30.00 |
- Issued _______ shares of preferred stock at par value as payment in exchange for legal services. (please refer to table below and use only the info in line with your surname initial in the blank/underlined space)
Surname Initial |
# of shares issued |
A, P, I, E, V |
2,000 |
C, O R, Y |
5,000 |
K, Q, M, F |
8,000 |
S, W, G, Z |
10,000 |
D, T, L, U |
12,000 |
N, B J, X, H |
14,000 |
- Exchanged ______ shares of common stock for land with an appraised value of $______ and a building with an appraised value of $_____. (please refer to table below and use only the info in line with your surname initial in the blank/underlined space)
Surname |
# of shares issued |
value of land |
Value of building |
A, P, I, E, V |
100,000 |
250,000.00 |
450,000.00 |
C, O R, Y |
120,000 |
300,000.00 |
500,000.00 |
K, Q, M, F |
160,000 |
400,000.00 |
650,000.00 |
S, W, G, Z |
200,000 |
500,000.00 |
700,000.00 |
D, T, L, U |
220,000 |
600,000.00 |
350,000.00 |
N, B, J, X, H |
260,000 |
650,000.00 |
500,000.00 |
- Earned Net income $______. (please refer to table below and use only the info in line with your surname initial in the blank/underlined space)
Surname Initial |
Net Income |
A, P, I, E, V |
500,000.00 |
C, O R, Y |
600,000.00 |
K, Q, M, F |
650,000.00 |
S, W, G, Z |
750,000.00 |
D, T, L, U |
820,000.00 |
N, B J, X, H |
900,000.00 |
- Paid dividends to preferred shareholders as well as $2 per share to common stockholders.
Using the info above and as a guide:
- Prepare the journal entries with narrations to record the following:
- The issuances of stock.
- Close out net income to
retained earnings . - Dividend paid.
- Close out dividend to retained earnings.
- Prepare Osbourne Corporation
Stockholders equity section of the balance sheet at December 31, 2021. (Hint!!!!!!!) The following information must be clearly stated/shown:- information on par values,
- the number of shares authorized and issued where necessary.
- the sub total for the total paid in capital.
- Retained earnings.
- total stockholders’ equity.
Step by step
Solved in 2 steps