Grouper Corporation is authorized to issue 22,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $5 par valuecommon stock. On January 1, 2022, the ledger contained the following stockholders' equity balances.Preferred Stock (11,500 shares)Paid-in Capital in Excess of Par-Preferred StockCommon Stock (69,000 shares)Paid-in Capital in Excess of Par-Common StockRetained EarningsDuring 2022, the following transactions occurred.Mar. 1JulySept. 1Feb. 1 Issued 1,900 shares of preferred stock for land having a fair value of $125,000.Issued 1,000 shares of preferred stock for cash at $70 per share.Issued 17,000 shares of common stock for cash at $7 per share.Dec.$575,0001(a)74,000345,000690,000290,000Issued 550 shares of preferred stock for a patent. The asking price of the patent was $31,500. Market price for thepreferred stock was $71 and the fair value for the patent was indeterminable.1 Issued 8,250 shares of common stock for cash at $7.50 per share.Dec. 31 Net income for the year was $257,000. No dividends were declared.Journalize the transactions and the closing entry for net income. (List all debit entries before credit entries. Record journal entries inthe order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

The journal entries are prepared to keep the record of day to day transactions of the business on regular basis. The issuance of shares is recorded by credit the account of issued shares such as preference shares capital and common stock account. JOURNAL Date Particulars Debit Amt $ Credit amt $ Feb 1 Land 125,000 Preferred stock (1,900 * $50) 95,000 Additional paid in capital - preferred stock 30,000 (To record issuance of preference shares) March 1 Cash (1,000 * $70) 70,000 Preferred stock (1,000 * $50) 50,000 Additional paid in capital - preferred stock 20,000 (To record issuance of preference shares) July 1 Cash (17,000 * $7) 119,000 Common stock (17,000 * $5) 85,000 Additional paid in capital - common stock 34,000 (To record issuance of common shares) Sep 1 Patent (550 * $71) 39,050 Preferred stock (550 * $50) 27,500 Additional paid in capital - preferred stock 11,550 (To record issuance of preference shares) Dec 1 Cash (8,250 * $7.5) 61,875 Common stock (8,250 * $5) 41,250 Additional paid in capital - common stock 20,625 (To record issuance of common shares) Dec 31 Income Summary 257,000 Retained earnings 257,000 (To record net income balance) Par value of preference shares = $575,000 / 11,500 = $50 per share Par value of common stock = $345,000 / 69,000 = $5 per share

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Grouper Corporation is authorized to issue 22,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $5 par value common stock. On January 1, 2022, the ledger contained the following stockholders' equity balances. Preferred Stock (11,500 shares) Paid-in Capital in Excess of Par-Preferred Stock Common Stock (69,000 shares) Paid-in Capital in Excess of Par-Common Stock Retained Earnings During 2022, the following transactions occurred. Mar. 1 July Sept. 1 Dec. (a) $575,000 1 74,000 Feb. 1 Issued 1,900 shares of preferred stock for land having a fair value of $125,000. Issued 1,000 shares of preferred stock for cash at $70 per share. 1 Issued 17,000 shares of common stock for cash at $7 per share. Issued 550 shares of preferred stock for a patent. The asking price of the patent was $31,500. Market price for the preferred stock was $71 and the fair value for the patent was indeterminable. Issued 8,250 shares of common stock for cash at $7.50 per share. Dec. 31 Net income for the year was $257,000. No dividends were declared. 345,000 690,000 290,000

Grouper Corporation is authorized to issue 22,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $5 par value common stock. On January 1, 2022, the ledger contained the following stockholders' equity balances. Preferred Stock (11,500 shares) Paid-in Capital in Excess of Par-Preferred Stock Common Stock (69,000 shares) Paid-in Capital in Excess of Par-Common Stock Retained Earnings During 2022, the following transactions occurred. Mar. 1 July Sept. 1 Dec. (a) $575,000 1 74,000 Feb. 1 Issued 1,900 shares of preferred stock for land having a fair value of $125,000. Issued 1,000 shares of preferred stock for cash at $70 per share. 1 Issued 17,000 shares of common stock for cash at $7 per share. Issued 550 shares of preferred stock for a patent. The asking price of the patent was $31,500. Market price for the preferred stock was $71 and the fair value for the patent was indeterminable. Issued 8,250 shares of common stock for cash at $7.50 per share. Dec. 31 Net income for the year was $257,000. No dividends were declared. 345,000 690,000 290,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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