Assume one year later (2019) the company BJ ice cream parlor has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making processThe 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:BJ ice cream parlor purchased a piece of land from the original owner. In payment for the land, BJ ice cream parlor issues $400,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,480,000.The company sold 110,000 shares of common stock with $1 par value.Issued 24,000 shares of $14 par value preferred stock. Shares were issued at par.Earned net income of $1,000,000Dividend declared and paid - $0.15 per share on common stockDividend declared and paid - $5 per share on preferred stockUsing the information above and as guided:1. Prepare the Journal entries and closing entries for the above transaction2. Prepare the owner’s equity section of the balance sheet based on the info above.

Answered: Assume one year later (2019) the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Assume one year later (2019) the company BJ ice cream parlor has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process

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:

BJ ice cream parlor purchased a piece of land from the original owner. In payment for the land, BJ ice cream parlor issues $400,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,480,000.
The company sold 110,000 shares of common stock with $1 par value.
Issued 24,000 shares of $14 par value preferred stock. Shares were issued at par.
Earned net income of $1,000,000
Dividend declared and paid - $0.15 per share on common stock
Dividend declared and paid - $5 per share on preferred stock

Using the information above and as guided:

1. Prepare the Journal entries and closing entries for the above transaction

2. Prepare the owner’s equity section of the balance sheet based on the info above.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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When share are issued at price higher than the par value, it is said to be issued at premium. Dividends are declared out of retained earnings.

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