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.
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.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter12: Corporations: Organization, Capital Structure, And Operating Rules
Section: Chapter Questions
Problem 27P
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Question
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
2. Prepare the owner’s equity section of the
Expert Solution
Step 1
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.
Step 2
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