Preferred stock

The property costs IPPP,OOH 3 years back and was carried on the advertisers' books at Pl 50,000. Jan. 31 Issued 30,000 portions of convertible favored stock at Pl 50 for each offer. Each offer can be changed over to five portions of basic stock. The organization paid IPPP,OOH to a specialist for selling the offers. Feb.. 15 Sold 9,000 portions of basic stock at IPPP per share. The company paid issue expenses of p 75,000. May 30 Received memberships for 12,000 portions of basic stock at IPPP per share. Muffle. 30 Issued 2,1 00 portions of regular stock and 4,200 portions of favored stock in traded for a structure with an honest evaluation Of Pl , 530,000.The structure was initially bought for Pl , 140,000 by the speculators and has a book estimation of IPPP,OOH. Also, 1,800 portions of basic stock were sold for IPPP,ooh money. Novo. 15 Payments in full for half of the memberships and fractional installments for the remainder of the memberships were gotten. Complete money got was Share s of stock were given for the completely paid memberships. Deck. Proclaimed a money profit of Pl O per share on favored stock, payable on December 31 to investors of record on December 1 5, and PEP per share money profit on normal stock, payable on January 15, 2006 to investors f record on December 15.Deck. 31 Paid the favored stock profit. Total compensation for the main year of activities was Pl QUESTIONS: Based on the abovementioned and the consequence of your review, decide the accompanying as of December 31, 2005: 1 . Regular stock a. IPPP,ooh p 144, 000 c. IPPP,ooh 2. Paid-in capital in overabundance of standard estimation of favored stock a. P 1 b. Pl 275,000 d. Pl 86,000 AP-5901 Q Page 2 of 5 Paid-in capital in overabundance of standard estimation of basic stock 3. A. PA,21 1,000 4. Held income d. IPPP,ooh 5. Complete investors' value SUGGESTED ANSWERS: C, C, C, D, B PROBLEM NO. 2The Perseverance Corporation has mentioned you to review its fiscal summaries for the year 2005. During your review, Perseverance introduced to you its monetary record as of December 31 , 2004 containing the accompanying capital area: Preferred stock POI standard; 60,000 offers approved and gave, of which 6,000 are treasury shares costing PEP,OOH and appeared as a benefit Common stock, standard worth PA; 600,000 offers approved, of which 450,000 are given and exceptional Additional paid in capital (PA per share on favored stock gave in 2000) Allowance for suspicious records receivable Reserve for depreciationReserve for fire protection Retained profit IPPP,ooh 300,000 12,000 840,000 198,000 Additional data: Of the favored stock, 3,000 offers were sold for P 18 for every offer on August 30, 2005. Determination attributed the returns to the Preferred Stock record. The treasury shares as of December 31, 2004 were procured in one buy in 2004. 2) The favored stock conveys a yearly profit of Pl per share. The profit is total. As of December 31, 2004, unpaid total profits added up to according to share. The whole amassing was exchanged in June, 2005, by giving to the favored investors 54,000 portions of normal tock. ) A money profit of Pl per share was proclaimed on December 1, 2005 to favored investors Of record December 1 5, 2005. The profit is payable on January 15, 2006. 4) At December 31, 2005, the Allowance for Doubtful Accounts Receivable and Reserve for Depreciation had equalizations of PEP,ooh and Pl individually. 5) On March 1, 2005, the Reserve for Fire Insurance was expanded by PEP,OOH; Retained Earnings was charged. 6) On December 31, 2005, the Reserve for Fire Insurance was diminished by PEP,000, which speaks to the conveying estimation of a machine wrecked by fire n that date.