Project #6082 - accounting homework

Rayzon Manufacturing's corporate charter authorizes the company to issue 800,000 shares of $5 par-value common stock and 400,000 shares of $1.25, no-par preferred stock with a stated value of $25 per share. During its first fiscal quarter (not first quarter ever, just first of the fiscal year) of 2013, Rayzon completed the following selected transaction: 

Oct. 1 Issued 60,000 shares of $5 par common stock for cash of $15 per share.
Oct. 1 Issued $100,000 of 9%, 10-year bonds payable at 97, interest is paid semiannually
Oct. 5 Issued 5,000 shares of no-par preferred stock, recieving cash of $200,000
Nov. 2 Purchased 15,000 shares of Rayzon common stock for the treasury at $20 per share
Dec.1 Sold 5,000 shares of the treasury stock for cash of $22 per share
Dec. 30 SOld merchandise on account, $900,000. Cost of goods sold was $500,000. Operating expenses totaled $150,000, with $100,000 of this amount paid in cash. Rayzon uses a perpetual inventory system.
Dec. 31 Accrued interest and amortized discount/premium (straight line method) on the bonds payable issued on October 1.
Dec. 31 Accrued income tax expense of $40,000
Dec. 31 Closed all revenues, expenses, and losses to Income Summary in a single closing entry.
Dec. 31 Declared a quarterly cash dividend of $1.25 per share on the preferred stock. Record date is January 11, with payment scheduled for January 19.

Requirements:

1. Record these transactions in the general journal. Explanations are not required.

2. Prepare a multistep income statement, including earnings per share, for the quarter ended December 31, 2013. Rayzon had a weighted average common stock outstanding of 155,000 shares of common stock during the quarter.

3. Prepare a statement of retained earnings for the quarter ended December 31, 2013. Rayzon began its fiscal year with $800,000 in retained earnings.

4. The dividends were made only to the preferred shareholders, why would the preferred shareholders be the only class to receive dividends? How do the common shareholders gain value from their ownership?

Subject Business
Due By (Pacific Time) 05/12/2013 12:00 am
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