ACC 227 Week 8 Assignment

  This file of ACC 227 Week 8 Assignment Cost Functions comprises: How would you determine the most important cost driver when estimating cost functions in the case of Reisen Travel?
Identify the cost driver and how it would impact Reisen
Business - Accounting
 E15-13 (a,b) (Stock Split and Stock Dividend)
 The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.

 (a) How much is the debit to retained earnings if the board votes a 2-for-1 stock split?
 (b) Prepare the necessary journal entries if the board votes a 100% stock dividend.

 P15-1 (Equity Transactions and Statement Preparation)
 On January 5, 2010, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par value common stock. It then completed these transactions.
 Jan. 11 Issued 20,000 shares of common stock at $16 per share.
 Feb. 1 Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: machinery with a fair market value of $50,000; a factory building with a fair market value of $160,000; and land with an appraised value of $270,000.
 July 29 Purchased 1,800 shares of common stock at $17 per share. (Use cost method.)
 Aug. 10 Sold the 1,800 treasury shares at $14 per share.
 Dec. 31 Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend.
 Dec. 31 Closed the Income Summary account. There was a $175,700 net income.

 Instructions
 (a) Record the journal entries for the transactions listed above.
 (b) Prepare the stockholders’ equity section of Phelps Corporation’s balance sheet as of December 31,
 2010.

 E16-20 (EPS: Simple Capital Structure) On January 1, 2010, Bailey Industries had stock outstanding as follows.


 6% Cumulative preferred stock, $100 par value,
 issued and outstanding 10,000 shares $1,000,000
 Common stock, $10 par value, issued and
 outstanding 200,000 shares 2,000,000
 To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional
 170,000 common shares. The acquisitions took place as shown below.
 Date of Acquisition Shares Issued
 Company A April 1, 2010 60,000
 Company B July 1, 2010 80,000
 Company C October 1, 2010 30,000
 On May 14, 2010, Bailey realized a $90,000 (before taxes) insurance gain on the expropriation of
 investments originally purchased in 2000.
 On December 31, 2010, Bailey recorded net income of $300,000 before tax and exclusive of the gain.
 Instructions
 Assuming a 40% tax rate, compute the earnings per share data that should appear on the financial statements
 of Bailey Industries as of December 31, 2010. Assume that the expropriation is extraordinary.

 P16-7 (Computation of Basic and Diluted EPS) Charles Austin of the controller’s office of Thompson  Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2011. Austin has compiled the information listed below.

 1. The company is authorized to issue 8,000,000 shares of $10 par value common stock. As of
 December 31, 2010, 2,000,000 shares had been issued and were outstanding.


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