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Santiago, Johnmart III-11

Case 9-1 Xytech Inc. JOURNAL ENTRIES 20X0 Jan.1 Asset and Current Liabilities Able, Capital Baker, Capital Cabot, Capital April 1 Asset and Current Liabilities Notes payable, Dec. 31 Able, Capital Baker, Capital Cabot, Capital Income Summary

300,000 100,000 100,000 100,000 100,000 100,000 18,000 18,000 18,000 54,000

GENERAL LEDGER Notes Payable 100,000

Able, Capital 18,000 Balance 82,000 100,000 18,000

Baker, Capital 18,000 Balance 82,000 100,000 18,000

Cabot, Capital 18,000 Balance 82,000 100,000 18,000

JOURNAL ENTRIES 20X1 April 26 Oct. 1 Asset and Current Liabilitie Loans payable, Cabot Bakers, Capital Able, Capital Cabot, Capital Income Summary Able, Capital Cabot, Capital 50,000 50,000 82,000 41,000 41,000 12,000 6,000 6,000

Dec. 31

GENERAL LEDGER Notes Payable 100,000 Loans Payable 50,000

Able, Capital 41,000 82,000 82,000 6,000 Balance 129,000

Baker, Capital 82,000 82,000

Cabot, Capital 41,000 6,000

Balance129,000

Able Capital, Jan.1 246,000 Transfer of Interes t 41,000 Net Income 6,000 Capital, Dec. 31 129,000

Xytech Inc. Statement of Partners Equity December 31. 20X1 Bake Gabot 82,000 82,000 (82,000) 6,000 ----

Total 82,000

41,000 12,000 129,000 258,000

JOURNAL ENTRIES 20X2 Partnership Books Jan.1 Able, Capital 100,000 Cabot, Capital 100,000 Share of Xytech 258,000 Corporate books Jan.1 Authorize to issue 500 shares at 100 par common stock Asset and Current Liabilities 408,000 Notes Payable 100,000 Loans Payable 150,000 Capital Stock 10,000 Share Premium 248,000 20x2 Asset and Current Liabilities 50,000 Notes Payable 50,000 Loans Payable 50,000 Asset and Current Liabilities 50,000 Income Summary 26,000 Retained Earnings 26,000

GENERAL LEDGER Notes Payable 100,000 50,000 Capital Stock 10,000 Share Premium 248,000 Retained earnings 26,000 Loans Payable 50,000 50,000

JOURNAL ENTRIES 20X3 Jan. 1 Share Split from 1000 to 1 Income Summary Retained earnings GENERAL LEDGER Notes Payable Retained earnings 150,000 26,000 Capital Stock 10,000

43,000 43,000

Share Premium 248,000 43,000

Basic earnings per share EPS= Net Income/ Outstanding shares = 43,000/100,000 = $0.43 JOURNAL ENTRIES 20X4 Jan.1 Asset and Current Liabilities 775,000 Capital stock 10,000 Share premium 765,000 Share premium 55,000 A&CL 55,000 Dec.31 Income Summary 68,000 Retained earnings 68,000 GENERAL LEDGER Notes Payable Retained earnings Capital Stock Share Premium

150,000 69,000 10,000 68,000

10,000

55,000 765,000

248,000

Capital, Jan.1 327,000 Additional Investment Issue Cost Net Income Capital, Dec. 31 1115,000

Xytech Inc. Statement of Shareholders Equity December 31. 20X1 Capital Stock Share Premium Retained Earnings 10,000 248,000 69,000 10,000 (55,000) 20,000 68,000 958,000 765,000

Total

775,000 (55,000) 68,000 137,000

JOURNAL ENTRIES 20X5 Jan.1 Asset and Current Liabilities Discount on Bonds Payable Bonds Patable Notes Payable Asset and Current Liabilities

475,000 25,000 500,000 150,000 150,000

8,000 Retained earnings GENERAL LEDGER Notes Payable

68,000

Bonds Payable

Discount on Bonds Payable

150,000

150,000

500,000

25,000

1,250

Capital Stock 20,000 JOURNAL ENTRIES 20X6

Share Premium 958,000

Retained Earnings 137,000 85,000

8,000 Retained earnings Retained earnings Asset and Current Liabilities GENERAL LEDGER Bonds Payable 500,000 Capital Stock 20,000

111,000 30,000 30,000

Discount on Bonds Payable 23,750 1,250 Share Premium 958,000 Xytech Inc. Retained Earnings 300,000 222,000 111,000

Capital, Jan.1 1,200,000 Net Income Capital, Dec. 31 1115,000

Statement of Shareholders Equity December 31. 20X1 Capital Stock Share Premium Retained Earnings 20,000 958,000 222,000 111,000 958,000 111,000 137,000

Total

20,000

JOURNAL ENTRIES

20X7

Asset and Current Liabilities

200,000

8,000 Retained earnings Retained earnings Asset and Current Liabilities GENERAL LEDGER Treasury Stock Payable 200,000

152,000 36,000 36,000

Bonds Payable 500,000 22,500

Discount on Bonds 1,250

Capital Stock 20,000

Share Premium 958,000

Retained Earnings 36,000 152,000 303,000

Basic earnings per share EPS= Net Income/ Outstanding shares = 152,000/180,000 = $0.84 Issued shares Shareholders Treasury Shares Outstanding JOURNAL ENTRIES 20X8 Preferred Stock 200,000 200,000 (20,000) 180,000

200,000

8,000 Retained earnings Retained earnings Asset and Current Liabilities

156,000 90,000 90,000

GENERAL LEDGER Treasury Stock Payable 200,000 Bonds Payable 500,000 21,250 Discount on Bonds 1,250

Capital Stock Preferred Stock 20,000 200,000 Basic earnings per share Net income

Share Premium 958,000 70,000

Retained Earnings 41,900

156,000 156,000

Preferred Income Net income to Common Issued shares Treasury shares Outstanding Shares

20,000 136,000 200,000 (20,000) 180,000

Basic earnings per share EPS= Net Income/ Outstanding shares = 136,000/180,000 = $0.75 Diluted earnings per share Outstanding Shares Shares to be converted Assumed shares Diluted earnings per share DPS= 156,000/188,000 = $0.83 JOURNAL ENTRIES 20X9

180,000 (8,000) 188,000

8,000 Retained earnings 252,000 Retained earnings 153,000 Stock dividend distributable 9,000 Share premium on stock dividends 152,100 Stock dividend distributable 900 Capital stock GENERAL LEDGER Bonds Payable 500,000 Capital Stock 20,000 900 Discount on Bonds Payable 20,000 1,250 Share Premium 958,000 153,000 152,100

900

Retained Earnings 505,000 252,000

Basic earnings per share

Outstanding shares Stock Dividends Total Outstanding shares Net income Preferred income Net income to common

180,000 9,000 189,000 252,000 (20,000) 232,000

Basic earnings per share (232,000/189,000)= 1.23 Diluted earnings per share Assumed common shares Stock dividend Total assumed shares DPS= (252,000/197,000)= $1.28

188,000 9,000 197,000

Debt/ Capitalization ratio: Bonds Payable Discounts on bonds 500,000 18,750

481,250

Capital stock 20,900 Share premium 1,110,100 Retained earnings 604,000 Treasury shares Total Liabilities and shareholders equity Debt Ratio Capitalization Ratio Debt/Capital

1,735,000 (200,000) 2,016,250

(481,250/2,016,250) =23.87% (1,535,000/2,016,250) =76.13% (481,250/1,535,000) = 31.35%