4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. Prepare the company's journal entries and statement of owner's equity based on the following information which is grouped according to the First name Initial. The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues 390,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,520,000 i) ii) The company sold 140,000 shares of common stock with $1 par value ii). Issued 26,000 shares of $22 par value preferred stock. Shares were issued at par. IV). Earned net income of $950,000 V. Dividend declared and paid - $0.15 per share on common stock Vi) Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: A. Prepare the Journal entries and closing entries for the above transaction B. Prepare the owner's equity section of the balance sheet based on the info above.
4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. Prepare the company's journal entries and statement of owner's equity based on the following information which is grouped according to the First name Initial. The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues 390,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,520,000 i) ii) The company sold 140,000 shares of common stock with $1 par value ii). Issued 26,000 shares of $22 par value preferred stock. Shares were issued at par. IV). Earned net income of $950,000 V. Dividend declared and paid - $0.15 per share on common stock Vi) Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: A. Prepare the Journal entries and closing entries for the above transaction B. Prepare the owner's equity section of the balance sheet based on the info above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sub Part Question 4. I need help.
Using the information in question 4 and as guided:
- Prepare the
Journal entries and closing entries for the above transaction
- Prepare the owner’s equity section of the
balance sheet based on the info above.
Transcribed Image Text:Scenario:
Karen and Yanique are opening a jewellery store with no competition in the area from which they intend to operate their
business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the
ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will
be an issue as they grow and as such, they feel the corporate form of operation will be best for the long term. They seek
your advice.
Requirements:
1. State three (3) of the main advantage they gain by selecting a corporate form of business now.
2. Would you recommend they initially issue preferred or common stock? Why?
3. If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what
is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give
the reason for your answer.
4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of
companying several financial transactions and possible outcomes to assist in guiding their decision-making process.
Prepare the company's journal entries and statement of owner's equity based on the following information which is
grouped according to the First name Initial.
The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the
following are the transactions for consideration:
KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues
390,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of
1,520,000
i)
ii)
The company sold 140,000 shares of common stock with $1 par value
ii).
Issued 26,000 shares of $22 par value preferred stock. Shares were issued at par.
IV). Earned net income of $950,000
V. Dividend declared and paid - $0.15 per share on common stock
Vi) Dividend declared and paid - $5 per share on preferred stock
Using the information above and as guided:
A. Prepare the Journal entries and closing entries for the above transaction
B. Prepare the owner's equity section of the balance sheet based on the info above.
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