Lee Corporation Equity Scenario Essay Sample
Lee Corporation is an American company that began operations on January 1. 2004. It has merely completed its 4th full twelvemonth of operations on December 31. 2007. Ending Year Balances for the anterior twelvemonth that ended on December 2006 were as follows:
Retained Net incomes: $ 225. 000
Common Stock at par: $ 500. 000
Extra Paid-in Capital: $ 1. 000. 000
Treasury Stock: $ 200. 000
Income before revenue enhancements for 2007 totaled $ 240. 000
Effective Tax Rate was 40 % for all old ages of operation including 2007
The undermentioned information relates to 2007:
1. An mistake was discovered during 2007. Specifically. depreciation disbursal was understated in 2005 ensuing in the demand for a Prior Period Adjustment of $ 25. 000 before revenue enhancements.
2. Lee Corporation changed its method of valuing stock list during 2007. The cumulative lessening in income from the alteration in stock list methods was $ 35. 000 before revenue enhancements.
3. Lee Corporation declared hard currency dividends of $ 100. 000 in late 2007 to be paid out in 2008.
Lee acquired a Canadian subordinate whose exclusive plus is a piece of land. Lee acquired the subordinate on 12/31/04 for the exact value of the land. CA $ 100. 000. Lee owns 100 % of the subordinate. Travel to www. x-rates. com and utilize the historic search characteristic to find the exact exchange rates on 12/31/04. 12/31/05. and 12/31/06.
1. Prepare journal entries for points 1 to 3 above.
2. Calculate and journalize the foreign exchange accommodations for 2005. 2006 and 2007 for the Canadian subordinate. 3. Fix a Retained Net incomes Statement for the twelvemonth ended December 31. 2007. 4. Fix a Statement of Changes in Stockholders Equity for the twelvemonth ended December 31. 2007.