few business accounting problems

Project Description:

question 1
the following information pertains to montague corporation:

net income $1,500,000 preferred dividends 250,000

average common equity $18,000,000 average common shares outstanding 600,000

calculate the return on common equity and the earnings per share (round to 2 decimal places)

question 2
on february 15, 2011, spring hope corporation repurchases 1,000 shares of its outstanding common stock for $9 per share. on march 1, 2011, spring hope sells 300 shares of treasury stock for $11 per share.

prepare the journal entries to record these transactions.

question 3
flaming lip corporation has 25,000 shares outstanding of 12% $15 par value, cumulative preferred stock. in 2009 and 2010, no dividends were declared on preferred stock. in 2011, flaming lip had a profitable year and decided to pay dividends to stockholders of both preferred and common stock.

if flaming lip has $200,000 available for dividends in 2011, how much could it pay to the preferred and common stockholders?

question 4

hot company issued $500,000 of 5-year, 9% bonds at 96 on january 1, 2012. the bonds pay interest twice a year.


(a) prepare the journal entry to record the issuance of the bonds.

(b) prepare the journal entry to record the first interest payment

(c) repeat the requirements from part (a), assuming the bonds were issued at 105.

question 5
question 17

freckle company issued $500,000 of bonds for $521,000. interest is paid semiannually.


1. prepare the necessary journal entry to record the issuance of the bonds.

2. is the market rate greater or less than the stated rate? how do you know?

question 6
red corporation has $2,000,000 in total liabilities and 3,500,000 in total assets as of december 31, 2012. of red's total liabilities, $350,000 is long-term

calculate red's debt to assets ratio and its long term debt to equity ratio.

question 7
king tut corporation has issued 25,000 shares of common stock, all of the same class; 18,000 shares are outstanding and 7,000 shares are held as treasury stock. on 12/1/11, king tut's board of directors declares a cash dividend of $0.75 per share payable on 12/15/11, to the stockholders of record on 12/10/11.

prepare the appropriate journal entries for the date of declaration, date of record, and the date of payment:
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