After establishing your company’s fiscal year-end to be October 31, you and Greg begin operating Sunrise Bakery Inc. on November 1, 2021. On that date, after the issuance of shares, the paid-in capital section of the company’s balance sheet is as follows. Paid-in capital Preferred stock, $0.50 noncumulative, no par value, 10,000 shares authorized; 2,000 shares issued $10,000 Common stock, no par value, 100,000 shares Authorized; 33,215 shares issued 33,215 Sunrise Bakery Inc. has the following selected transactions during its first year of operations. Dec. 1 Issues an additional 900 preferred shares to your sibling for $4,500. Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1. June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets. Oct. 31 The company has had a very successful first year of operations. It earned revenues of $468,500 and incurred expenses of $366,050 (including $750 legal fee but excluding income tax). 31 Records income tax expense. (The company has a 20% income tax rate.) 31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1. Required part C Prepare the journal entries to record the above transactions. Prepare the retained earnings statement for the year. Prepare the stockholders’ equity section of the balance sheet as of October 31. Prepare closing entries.
After establishing your company’s fiscal year-end to be October 31, you and Greg begin operating Sunrise Bakery Inc. on November 1, 2021. On that date, after the issuance of shares, the paid-in capital section of the company’s
Paid-in capital
Preferred stock, $0.50 noncumulative, no par value,
10,000 shares authorized; 2,000 shares issued $10,000
Common stock, no par value, 100,000 shares
Authorized; 33,215 shares issued 33,215
Sunrise Bakery Inc. has the following selected transactions during its first year of operations.
Dec. 1 Issues an additional 900
Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1.
June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets.
Oct. 31 The company has had a very successful first year of operations. It earned revenues of $468,500 and incurred expenses of $366,050 (including $750 legal fee but excluding income tax).
31 Records income tax expense. (The company has a 20% income tax rate.)
31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1.
Required part C
- Prepare the
journal entries to record the above transactions. - Prepare the
retained earnings statement for the year. - Prepare the
stockholders’ equity section of the balance sheet as of October 31. - Prepare closing entries.
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