Lurvey-Priest, Inc., was organized in 2011. At December 31, 2011, the Lurvey-Priest balance sheet reported the following stockholders’ equity:

$$\begin{array}{lr} \textbf{LURVEY-PRIEST, INC.}\\ \textbf{Stockholders’ Equity}\\ \textbf{December 31, 2011}\\ \hline \text{Paid-in Capital:}&\\ \quad\text{Paid-in Capital: Preferred stock, 4\\\%, \$55 par, 140,000 shares authorized, none issued}&\$ 0\\ \quad\text{Common stock, \$2 par, 540,000 shares authorized, 62,000 shares issued and outstanding}&124,000\\ \quad\text{Paid in capital in excess of par—common}&42,000\\ \quad\quad\text{Total paid-in capital}&166,000\\ \text{Retained earnings}&28,000\\ \text{Total stockholders’ equity}&\$ 194,000\\ \end{array}$$

Requirements

1. During 2012, the company completed the following selected transactions. Journalize each transaction. Explanations are not required. a. Issued for cash 1,500 shares of preferred stock at par value. b. Issued for cash 2,000 shares of common stock at a price of $7 per share. c. Net income for the year was$78,000, and the company declared no dividends. Make the closing entry for net income.
2. Prepare the stockholders’ equity section of the Lurvey-Priest balance sheet at December 31, 2012.

Fashonista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares of$2 par common stock outstanding. During a three-year period, Fashionista declared and paid cash dividends as follows: 2010, $3,000; 2011,$13,000; and 2012, $17,000. Requirements

1. Compute the total dividends to preferred and to common for each of the three years if a. preferred is noncumulative. b. preferred is cumulative.
2. For requirement 1.b., journalize the declaration of the 2012 dividends on December 22, 2012, and payment on January 14, 2013. Use separate Dividends payable accounts for preferred and common.

Consider the following transactions that occurred in February 2012 for Gems.

Feb. 3. Purchased inventory on terms 1/5, n/eom, $2,000. 4. Purchased inventory for cash of$1,600. 6. Returned $600 of inventory from February 4 purchase. 8. Sold goods on terms of 2/15, n/35 of$7,000 that cost $3,500. 10. Paid for goods purchased on February 3. 12. Received goods from February 8 sale of$500 that cost $190. 23. Received payment from February 8 customer. 25. Sold goods to Farms for$900 that cost $350. Terms of n/30 were offered. As a courtesy to Farms,$75 of freight was added to the invoice for which cash was paid directly to UPS by Gems. 29. Received payment from Farms.

Requirement

1. Journalize February transactions for Gems. No explanations are required.

Consider the following transactions that occurred in January 2012 for 5th Grader.

Jan. 1. Purchased $5,000 of inventory from M&P, terms 1/10, n/20. 3. Sold$1,000 of goods to Display Town, Inc., terms 2/10, n/eom *(Cost $700). 5. Display Town, Inc., returned$300 of goods (Cost $183). 11. Paid M&P. 13. Received payment from Display Town, Inc.

Requirements

1. What type of inventory system is 5th Grader using—periodic or perpetual?
2. Which transaction date helped you decide?
3. Journalize January transactions for 5th Grader. No explanations are required.

The adjusted trial balance of Big Papi Music Company at June 30, 2012, follows

$$\begin{array}{c} \textbf{DADDY’S MUSIC COMPANY}\\ \textbf{Adjusted Trial Balance}\\ \textbf{April 30, 2012}\\ \end{array}$$

$$\begin{array}{lrr} \textbf{Account}&\textbf{Debit}&\textbf{Credit}&\\ \text{Cash}&\$4,300&\\ \text{Accounts receivable}&38,200&\\ \text{Inventory}&17,800&\\ \text{Supplies}&600&\\ \text{Furniture}&39,400&\\ \text{Accumulated depreciation}&&\$9,000\\ \text{Accounts payable}&&13,600\\ \text{Salary payable}&&1,200\\ \text{Unearned sales revenue}&&6,600\\ \text{Note payable, long–term}&&14,000\\ \text{Papi, capital}&&40,100\\ \text{Papi, drawing}&40,000&\\ \text{Sales revenue}&&180,000\\ \text{Sales returns}&8,000&\\ \text{Cost of goods sold}&81,800&\\ \text{Selling expense}&19,200&\\ \text{General expense}&14,000&\\ \text{Interest expense}&1,200&\\ \hline\text{Total}&\$264,500&\$264,500\\\hline\hline \end{array}$$

Requirements

1. Journalize Daddy’s closing entries.
2. Prepare Daddy’s single-step income statement for the year.
3. Compute the gross profit percentage, the rate of inventory turnover, and the days in inventory for the fiscal year ending April 30, 2012. Inventory on hand one year ago, at April 30, 2011, was $13,000.
4. For the year ended April 30, 2011, Daddy’s gross profit percentage was 50%, and inventory turnover was 4.9 times. Did the results for the year ended April 30, 2012, suggest improvement or deterioration in profitability over last year?

Thelma’s Amusements completed the following transactions during November 2012: Nov 1. Purchased supplies for cash, $700. 4. Purchased inventory on credit terms of 3/10, n/eom,$9,600. 8. Returned half the inventory purchased on November 4. It was not the inventory ordered. 10. Sold goods for cash, $1,200 (cost,$700). 13. Sold inventory on credit terms of 2/15, n/45, $9,900 (cost,$5,300). 14. Paid the amount owed on account from November 4, less the return (November 8) and the discount. 17. Received defective inventory as a sales return from the November 13 sale, $600. Thelma’s cost of the inventory received was$450. 18. Purchased inventory of $4,100 on account. Payment terms were 2/10, net 30. 26. Paid the net amount owed for the November 18 purchase. 28. Received cash in full settlement of the account from the customer who purchased inventory on November 13, less the return and the discount. 29. Purchased inventory for cash,$12,000, plus freight charges of $200.

Requirement

1. Journalize the transactions on the books of Thelma’s Amusements.

Consider the following transactions that occurred in September 2012 for Aquamarines.

Sep. 3. Purchased inventory on terms 1/15, n/eom, $5,000. 4. Purchased inventory for cash of$1,700. 6. Returned $500 of inventory from September 4 purchase. 8. Sold goods on terms of 2/15, n/35 of$6,000 that cost $2,640. 10. Paid for goods purchased September 3. 12. Received goods from September 8 sale of$400 that cost $160. 23. Received payment from September 8 customer. 25. Sold goods to Smithsons for$1,100 that cost $400. Terms of n/30 were offered. As a courtesy to Smithsons,$75 of freight was added to the invoice for which cash was paid directly to UPS by Aquamarines. 29. Received payment from Smithsons.

Requirement

1. Journalize September transactions for Aquamarines. No explanations are required.

B-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes B-Mobile to issue 70,000 shares of 5%, $100-par preferred stock, and 110,000 shares of no-par common stock. B-Mobile completed the following transactions: Oct 2.Issued 19,000 shares of common stock for equipment with a market value of$110,000. 6. Issued 800 shares of preferred stock to acquire a patent with a market value of $80,000. 9. Issued 15,000 shares of common stock for cash of$90,000. Requirements

1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of the B-Mobile balance sheet at October 31. The ending balance of Retained earnings is $92,000.

Dates, Corp., issued 4,000 shares of no-par common stock for $9 per share. Requirements

1. Record issuance of the stock if the stock a. is true no-par stock and b. has stated value of$2 per share.
2. Which type of stock results in more total paid-in capital?

At the beginning of the year, Alaska Freight Airlines purchased a used airplane for $43,000,000. Alaska Freight Airlines expects the plane to remain useful for five years (4,000,000 miles) and to have a residual value of$7,000,000. The company expects the plane to be flown 1,400,000 miles the first year. Requirements

1. Compute Alaska Freight Airlines’ first-year depreciation on the plane using the following methods: a. Straight-line b. Units-of-production c. Double-declining-balance
2. Show the airplane’s book value at the end of the first year under the straight-line method.

The charter for KCAS-TV, Inc., authorizes the company to issue 100,000 shares of $4, no-par preferred stock and 500,000 shares of common stock with$1 par value. During its start-up phase, KCAS completed the following transactions: Sep 6. Issued 275 shares of common stock to the promoters who organized the corporation, receiving cash of $8,250. 12. Issued 400 shares of preferred stock for cash of$20,000. 14. Issued 1,600 shares of common stock in exchange for land valued at $18,000. 30. Closed net income of$32,000 into Retained earnings. Requirements

1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of the KCAS-TV balance sheet at September 30, 2012.

Northern Communications has the following stockholders’ equity:

$$\begin{array}{lr} \textbf{NORTHERN COMMUNICATIONS}\\ \textbf{Stockholders’ Equity}\\ \hline \text{Paid-in Capital:}&\\ \text{Preferred stock, 6\\\%, \$11 par, 150,000 shares authorized}&\\ \quad\text{20,000 shares issued and outstanding}&\$ 220,000\\ \quad\text{Common stock,\$3 par, 575,000 shares authorized}&\\ \quad\text{400,000 shares issued and outstanding}&1,200,000\\ \text{Paid-in capital in excess of par—common}&1,000,000\\ \text{Total paid-in capital}&2,420,000\\ \text{Retained earnings}&190,000\\ \text{Total stockholders’ equity}&\$2,610,000\\ \hline \end{array}$$

Requirements

1. First, determine whether preferred stock is cumulative or noncumulative.
2. Compute the amount of dividends to preferred and to common for 2011 and 2012 if total dividends are $12,200 in 2011 and$55,000 in 2012.
3. What is the average price at which each preferred share sold for? What is the average price at which each common share sold for?

Northern Communications has the following stockholders' equity on December 31, 2018:

$$\begin{array}{c} \textbf{Stockholders' Equity}\\ \end{array}$$

$$\begin{array}{lrr} \text{Paid-In Capital:}\\ \hspace{10pt}\text{Preferred Stock-5\\\%, \$11 Par Value; 150,000 shares}\\ \hspace{20pt}\text{authorized, 20,000 shares issued and outstanding}\hspace{10pt}&\text{\$\hspace{13pt}220,000}\\ \hspace{10pt}\text{Common Stock-\$2 Par Value; 575,000 shares}\\ \hspace{20pt}\text{authorized, 380,000 shares issued and outstanding}\hspace{10pt}&\text{760,000}\\ \hspace{10pt}\text{Paid-In Capital in Excess of Par-Common}&\underline{\text{\hspace{18pt}680,000}}\\ \hspace{10pt}\text{Total Paid-In Capital}&\text{\$\hspace{5pt}1,660,000}\\ \text{Retained Earnings}&\underline{\text{\hspace{18pt}200,000}}\\ \text{Total Stockholders' Equity}&\text{\underline{\underline{\$\hspace{5pt}1,860,000}}}\\ \end{array}$$

Requirements

1. Assuming the preferred stock is cumulative, compute the amount of dividends to preferred stockholders and to common stockholders for 2018 and 2019 if total dividends are $9,000 in 2018 and$45,000 in 2019. Assume no changes in preferred stock and common stock in 2019.
2. Record the journal entries for 2018, assuming that Northern Communications declared the dividend on December 1 for stockholders of record on December 10. Northern Communications paid the dividend on December 20.

The charter of Evergreen Capital Corporation authorizes the issuance of 900 shares of preferred stock and 1,250 shares of common stock. During a two month period, Evergreen completed these stock-issuance transactions: Mar 23. Issued 230 shares of $4 par common stock for cash of$15 per share. Apr 12. Received inventory valued at $23,000 and equipment with a market value of$20,000 for 320 shares of the $4 par common stock. 17. Issued 900 shares of 5%,$20 par preferred stock for $20 per share. Requirements

1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of the Evergreen balance sheet for the transactions given in this exercise. Retained earnings has a balance of$79,000.