On October 15, 2016, a 5% stock dividend was declared and distributed. The market
value of the common stock on this date was $32 per share. Fractional share rights
represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On
the date of declaration and payment, the company had 10 million shares of common
stock outstanding. The par value of the common shares was $5.
Required:
Prepare any necessary journal entries to record the above events.
Shown below is the activity for one of the products of Random Creations: January 1
balance, 80 units @ $50 $4,000
Purchases:
January 18: 40 units @ $51
January 28: 40 units @ $52
Sales:
January 12: 30 units
January 22: 30 units
January 31: 45 units Required: Compute the January 31 ending inventory and cost of
goods sold for January, assuming Random Creations uses FIFO.
Briefly explain the circumstances that indicate the seller has a bill-and-hold sale and a
consignment sale, and how that affects the timing of revenue recognition for each.
In the following questions, inventory errors are noted for 2016. Assume that the errors
are not discovered until 2017, and that the company uses a periodic inventory system.
Indicate the effect of the error, if any, on the accounts noted in the columns, using the
following code:
U = Understated; O = Overstated; NE = No effect
DEF Company will issue $2,000,000 in 10%, 10-year bonds when the market rate of
interest is 12%. Interest is paid semiannually.
Required: Determine how much cash DEF Company should realize from the bond
issue.
