No. 2(c): Below are the related explanations and the journal entries with narratives to record the transactions of Bernice Inc.
The par value of the share is $10, however the 15,000 shares were exchanged for assets worth $240,000 therefore this means that they were issued at a value of $16 per share, ($240,000/1500 shares). The excess of $6, ($16-$6), is the par value is the share’s premium.
Notes 2 and 3:
Bernice Inc purchased 35% of the outstanding shares of Fly Corporation and Fly Corporation paid out a total cash dividend of $120,000. Therefore Bernice Inc received 35% of $120,000 = $42,000.
The loan interest due is calculated at $80,000 x 10% x 3/12 since only three (3) months interest has been accrued.
The value of the stock dividend paid is $10 x 9,000 shares.
Now that all the necessary workings has been done the journal entries can be prepared.
I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to comment below. Best of luck!
The author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor.