Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $14.0 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,300 common shares at $4.4 each. 20 Issued 6,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $32,000. 31 Issued 76,000 common shares in exchange for land, building, and equipment, which have fair market values of $356,000, $476,000, and $44,000, respectively. Mar. 4 Purchased equipment at a cost of $8,120 cash. This was thought to be a special bargain price. It was felt that at least $10,400 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $92,000. The Income Summary account was closed. 2021 Jan. 4 Issued 7,000 preferred shares at $68 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $212,000. 2022 Dec. 4 The company declared a cash dividend of $0.62 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $177,320. The Income Sunnary account was closed. Required: 1. Journalize the transactions for the years 2020, 2021, and 2022. The company does not use a cash dividends account
Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $14.0 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,300 common shares at $4.4 each. 20 Issued 6,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $32,000. 31 Issued 76,000 common shares in exchange for land, building, and equipment, which have fair market values of $356,000, $476,000, and $44,000, respectively. Mar. 4 Purchased equipment at a cost of $8,120 cash. This was thought to be a special bargain price. It was felt that at least $10,400 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $92,000. The Income Summary account was closed. 2021 Jan. 4 Issued 7,000 preferred shares at $68 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $212,000. 2022 Dec. 4 The company declared a cash dividend of $0.62 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $177,320. The Income Sunnary account was closed. Required: 1. Journalize the transactions for the years 2020, 2021, and 2022. The company does not use a cash dividends account
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an
unlimited number of common shares and 100,000 shares of $14.0 non-cumulative preferred shares. The following transactions are
among those that occurred during the first three years of operations:
2020
Jan. 12 Issued 40,300 common shares at $4.4 each.
20 Issued 6,000 common shares to promoters who provided legal services that helped
to establish the company. These services had a fair value of $32,000.
31 Issued 76,000 common shares in exchange for land, building, and equipment, which
have fair market values of $356,000, $476,000, and $44,000, respectively.
Mar. 4 Purchased equipment at a cost of $8,120 cash. This was thought to be a special
bargain price. It was felt that at least $10,400 would normally have had to be
paid to acquire this equipment.
Dec. 31 During 2020, the company incurred a loss of $92,000. The Income Summary account
was closed.
2021
Jan. 4 Issued 7,000 preferred shares at $68 per share.
Dec. 31 The Income Summary account was closed. Profit for 2021 was $212,000.
2022
Dec. 4 The company declared a cash dividend of $0.62 per share on the common shares
payable on December 18 and also declared the required dividend on the preferred
shares.
18 Paid the dividends declared on December 4.
31 Profit for the year ended December 31, 2822, was $177,320. The Income Summary
account was closed.
Required:
1. Journalize the transactions for the years 2020, 2021, and 2022. The company does not use a cash dividends account.
View transaction list
Journal entry worksheet
<
Record the issuance of shares.
Note: Enter debits before credits.
Date
Jan 12, 2020
9 10 >
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
2. Prepare the statement of changes in equity for the year ended December 31, 2022. (Amounts to be deducted should be indicated
by a minus sign.)
Balance, January 1
HAMMOND MANUFACTURING INC.
Statement of Changes in Equity
For Year Ended December 31, 2022
Preferred
Shares
Common
Shares
Retained
Earnings
Total Equity
Balance, December 31
$
0 $
0 S
0 $
3. Prepare the equity section on the December 31, 2022, balance sheet.
HAMMOND MANUFACTURING INC.
Contributed capital:
Total contributed capital
Total equity
Equity Section of the Balance Sheet
December 31, 2022
$
0
Analysis Component:
Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable?
2020
Net assets
Trend
2021
2022
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education