The stockholders' equity section of Larkspur Inc. at the beginning of the current year appears below....

 

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The stockholders' equity section of Larkspur Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 954,000 shares, 307,000 shares issued and outstanding Paid-in capital in excess of par-common stock Retained earnings $3,070,000 553,000 614,000 During the current year, the following transactions occurred. 1. 2. The company issued to the stockholders 92,000 rights. Ten rights are needed to buy one share of stock at $35. The rights were void after 30 days. The market price of the stock at this time was $37 per share. The company sold to the public a $194,000, 10% bond issue at 103. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $33 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $7. 3. All but 4,600 of the rights issued in (1) were exercised in 30 days. 4. 5. 6. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing. During the current year, the company granted stock options for 10,800 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $33. The options were to expire at year-end and were considered compensation for the current year. All but 1,080 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract. (a) Prepare general journal entries for the current year to record the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 7 decimal places, e.g. 1.2468756 and final answers to O decimal places, e.g. 5,125.) No. Account Titles and Explanation Debit Credit The stockholders' equity section of Larkspur Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 954,000 shares, 307,000 shares issued and outstanding Paid-in capital in excess of par-common stock Retained earnings $3,070,000 553,000 614,000 During the current year, the following transactions occurred. 1. 2. The company issued to the stockholders 92,000 rights. Ten rights are needed to buy one share of stock at $35. The rights were void after 30 days. The market price of the stock at this time was $37 per share. The company sold to the public a $194,000, 10% bond issue at 103. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $33 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $7. 3. All but 4,600 of the rights issued in (1) were exercised in 30 days. 4. 5. 6. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing. During the current year, the company granted stock options for 10,800 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $33. The options were to expire at year-end and were considered compensation for the current year. All but 1,080 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract. (a) Prepare general journal entries for the current year to record the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 7 decimal places, e.g. 1.2468756 and final answers to O decimal places, e.g. 5,125.) No. Account Titles and Explanation Debit Credit

Answer rating: 100% (QA)

1 Issuance of rights Cash 92000 rights 10 rights per share 35 Common Stock 9200 shares 10 par value Paidin Capital in Excess of ParCommon Stock Cash D... View the full answer