INTERMEDIA 101- Olsson Corporation received a check from its underwriters

Olsson Corporation received a check from its underwriters for $80 million. This was for the issue of one million of its $5 par stock that the underwriters expect to sell for $80 per share.

Which is the correct entry to record the issue of the stock?

A company’s postretirement health care benefit plan had an APBO of $225,000 on January 1, 2016. During 2016, retiree benefits paid were $36,000. The discount rate for the plan for this year was 10%. Service cost for 2016 was $76,000. Plan assets (fair value) increased during the year by $287,500. The amount of the APBO at December 31, 2016, was:

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $58,000. If the benefits relate to an estimated 25 years of service and four of those years have been completed:

Rick Co. had 35 million shares of $3 par common stock outstanding at January 1, 2016. In October, 2016, Rick Co.’s Board of Directors declared and distributed a 3% common stock dividend when the market value of its common stock was $56 per share. In recording this transaction, Rick would:

On June 1, 2016, Blue Co. distributed to its common stockholders 300,000 outstanding common shares of its investment in Red, Inc., an unrelated party. The book value on Blue’s books of Red’s $1 par common stock was $2.10 per share. Immediately after the declaration, the market price of Red’s stock was $2.80 per share. In its income statement for the year ended June 30, 2016, what amount should Blue report as gain before income taxes on disposal of the stock? (Do not round your intermediate calculation.)

The following incomplete (columns have missing amounts) pension spreadsheet is for Old Tucson Corporation (OTC).

($ in millions) debit (credit)

PBO

Plan assets

Prior service cost

Net (Gain) loss

Pension Expenses

Cash

Net Pension (Liability)/ Asset

Beginning Balance

(580)

82

Service cost

86

Interest cost

Expected return on assets

(31)

Gain/loss on assets

(6)

Amortization of:

Prior service cost

(14)

Net gain loss

Loss on PBO

(33)

33

Contribution to funds

(80)

Retiree benefits paid

59

(59)

Ending balance

(667)

335

78

102

(333)

What was the prior service cost at the beginning of the year?

Fox Company received the following reports of its defined benefit pension plan for the current calendar year:

PBO

Plan assets

Balance, January 1

$600,000

Balance, January 1

$520,000

Service cost

365,000

Actual return

52,000

Interest cost

71,000

Annual contribution

224,000

Benefits paid

(93,000)

Benefits paid

(93,000)

Balance, December 31

$943,000

Balance, December 31

$703,000

The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what is the pension expense for the year?

The following partial information is taken from the comparative balance sheet of Levi Corporation:

Shareholders’ equity

12/31/2016

12/31/2015

Common stock, $5 par value; 25 million shares authorized; 20 million shares issued and 13 million shares outstanding at 12/31/2016; and ____million shares issued and ____shares outstanding at 12/31/2015.

$100 million

$65 million

Additional paid-in capital on common stock

525 million

393 million

Retained earnings

202 million

162 million

Treasury common stock, at cost, 7 million shares at 12/31/2016 and 3 million shares at 12/31/2015

(88 million)

(38 million)

Total shareholders’ equity

$739 million

$582 million

What was the average price of the additional treasury shares purchased by Levi during 2016?(Round your answer to 2 decimal places.)

Number of employees covered

5

Years employed as of January 1

4 (each)

Attribution period

20 years

EPBO, January 1

$61,000

EPBO, December 31

$65,880

Interest rate

8%

Funding and plan assets

None

What is the interest cost to be included in the current year’s postretirement benefit expense?

Roberto Corporation was organized on January 1, 2016. The firm was authorized to issue 84,000 shares of $5 par common stock. During 2016, Roberto had the following transactions relating to shareholders’ equity:

Issued 10,100 shares of common stock at $6.30 per share.

Issued 19,600 shares of common stock at $8.80 per share.

Reported a net income of $100,000.

Paid dividends of $52,000.

Purchased 3,700 shares of treasury stock at $10.80 (part of the 19,600 shares issued at $8.80).

What is total shareholders’ equity at the end of 2016?

The estimated medical costs are expected to be $12,500 during an employee’s retirement. The retiree is expected to pay 20% of the cost and Medicare is expected to pay 40% of the cost. What is the company’s estimated net cost of benefits?

On October 1, 2016, Chief Corporation declared and issued a 6% stock dividend. Before this date, Chief had 78,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief’s retained earnings will:

A company’s defined benefit pension plan had a PBO of $269,000 on January 1, 2016. During 2016, pension benefits paid were $41,000. The discount rate for the plan for this year was 10%. Service cost for 2016 was $84,000. Plan assets (fair value) increased during the year by $55,000. The amount of the PBO at December 31, 2016, was:

Lucid Company declared a property dividend of 20,000 shares of $1 par Polk Company common stock. The Polk stock was purchased for $5 per share. Market value was $10 per share on the declaration date and $11 per share on the distribution date. What is the amount of the dividend?

On January 1, 2016, the board of directors of Goby Inc. declared a $730,000 dividend. The following data are from the balance sheet of Goby on that date:

Common stock

$540,000

Paid-in capital – excess of par

$340,000

Retained earnings

$586,000

Paid-in capital from sale of treasury stock

$ 54,000

How much is the liquidating dividend?

As of December 31, 2016, Warner Corporation reported the following:

Dividends payable

$32,000

Treasury stock

570,000

Paid-in capital – share repurchase

32,000

Other paid-in capital accounts

5,200,000

Retained earnings

$4,200,000

During 2017, half of the treasury stock was resold for $250,000; net income was $570,000; cash dividends declared were $1,380,000; and stock dividends declared were $620,000.

What was shareholders’ equity as of December 31, 2016?

Assume that at the beginning of the current year, a company has a net gain-AOCI of $60,400,000. At the same time, assume the PBO and the plan assets are $306,000,000 and $454,800,000, respectively. The average remaining service period for the employees expected to receive benefits is 10 years. What is the amount of amortization to pension expense for the year?

The following partial information is taken from the comparative balance sheet of Levi Corporation:

Shareholders’ equity

12/31/2016

12/31/2015

Common stock, $5 par value; 36 million shares authorized; 31 million shares issued and 25 million shares outstanding at 12/31/2016; and ____million shares issued and ____shares outstanding at 12/31/2015.

$155 million

$125 million

Additional paid-in capital on common stock

523 million

401 million

Retained earnings

192 million

160 million

Treasury common stock, at cost, 6 million shares at 12/31/2016 and 4 million shares at 12/31/2015

(67 million)

(45 million)

Total shareholders’ equity

$803 million

$641 million

What was the average price (rounded to the nearest dollar) of the additional shares issued by Levi in 2016?

The shareholders’ equity of Green Corporation includes $332,000 of $1 par common stock and $520,000 par value of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $62,000 in 2016 after paying $32,000 cash dividends in each of 2015 and 2014. What is the amount of dividends common shareholders will receive in 2016?

Assume that at the beginning of the current year, a company has a net gain-AOCI of $26,700,000. At the same time, assume the PBO and the plan assets are $226,200,000 and $157,000,000, respectively. The average remaining service period for the employees expected to receive benefits is 10 years. What is the amount of amortization to pension expense for the year?

Data for 2016 were as follows: PBO, January 1, $247,000 and December 31, $270,000; pension plan assets (fair value) January 1, $188,000, and December 31, $240,000. The projected benefit obligation was underfunded at the end of 2016 by:

Number of employees covered

5

Years employed as of January 1

4 (each)

Attribution period

20 years

EPBO, January 1

$59,000

EPBO, December 31

$63,720

Interest rate

8%

Funding and plan assets

None

The following partial information is taken from the comparative balance sheet of Levi Corporation:

Shareholders’ equity

12/31/2016

12/31/2015

Common stock, $5 par value; 39 million shares authorized; 34 million shares issued and 31 million shares outstanding at 12/31/2016; and ____million shares issued and ____shares outstanding at 12/31/2015.

$170 million

$155 million

Additional paid-in capital on common stock

526 million

398 million

Retained earnings

189 million

163 million

Treasury common stock, at cost, 3 million shares at 12/31/2016 and 1 million shares at 12/31/2015

(64 million)

(42 million)

Total shareholders’ equity

$821 million

$674 million

How many of Levi’s common shares were outstanding on 12/31/2015?

Number of employees covered

5

Years employed as of January 1

4 (each)

Attribution period

20 years

EPBO, January 1

$60,000

EPBO, December 31

$64,200

Interest rate

7%

Funding and plan assets

None

Scallion Company received the following reports of its defined benefit pension plan for the current calendar year:

PBO

Plan assets

Balance, January 1

$410,000

Balance, January 1

$258,000

Service cost

194,000

Actual return

38,000

Interest cost

36,000

Annual contribution

118,000

Benefits paid

(84,000)

Benefits paid

(84,000)

Balance, December 31

$556,000

Balance, December 31

$330,000

The long-term expected rate of return on plan assets is 10%. Assuming no other data are relevant, what is the pension expense for the year?