Kk. 236. Preferred Stock, $100 par, 5%Common Stock, $10 parPaid-in Capital in Excess of Par-Preferred Stock$200.000Account Titles and Explanation400,000Paid-in Capital in Excess of Par-Common Stock100,000Retained Earnings300.000There were no dividends in arrears on preferred stock. During 20211 the company had the following transactions and events. December 31 Determined that net income for the year was $150,000.INSTRUCTIONSJournalize the closing transaction. Follow the following instructions to receive credit.1. Date should be spelled correctly and written as Month Day (ex. February 4).2. Credit account titles are automatically indented when title is entered. Do not indent manually.3. Account titles must be spelled correctly.4. Do not key S-signs within journal entries.DateDebit50,000Credit

JOURNAL ENTRIESJournal Entry is the First stage of Accounting Process. Journal Entry is the Process…

Answered: Preferred Stock, $100 par, 5% Common…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 87PSB

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Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.
Treasury Stock, Cost Method Bush-Caine Company reported the following data on its December 31, 2018, balance sheet: The following transactions were reported by the company during 2019: 1. Reacquired 200 shares of its preferred stock at 57 per share. 2. Reacquired 500 shares of its common stock at 16 per share. 3. Sold 100 shares of preferred treasury stock at 58 per share. 4. Sold 200 shares of common treasury stock at 17 per share. 5. Sold 100 shares of common treasury stock at 9 per share. 6. Retired the shares of common stock remaining in the treasury. The company maintains separate treasury stock accounts and related additional paid-in capital accounts for each class of stock. Required: 1. Prepare the journal entries required to record the treasury stock transactions using the cost method. 2. Assuming the company earned a net income in 2019 of 30.000 and declared and paid dividends of 10,000, prepare the shareholders equity section of its balance sheet at December 31, 2019.
Statement of Stockholders' Equity At the end of 2019, Stanley Utilities Inc. had the following equity accounts and balances: During 2020, Stanley Utilities engaged in the following transactions involving its equity accounts: Sold 3,300 shares of common stock for $15 per share. Sold 1,000 shares of 12%, $100 par preferred stock at $105 per share. Declared and paid cash dividends of $8,000. Repurchased 1,000 shares of treasury stock (common) for $38 per share. Sold 400 of the treasury shares for $42 per share. Required: Prepare the journal entries for Transactions a through e. Assume that 2020 net income was $87,000. Prepare a statement of stockholders equity at December 31, 2020.
On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
Anoka Company reported the following selected items in the shareholders equity section of its balance sheet on December 31, 2019, and 2020: In addition, it listed the following selected pretax items as a December 31, 2019 and 2020: The preferred shares were outstanding during all of 2019 and 2020; annual dividends were declared and paid in each year. During 2019, 2,000 common shares were sold for cash on October 4. During 2020, a 20% stock dividend was declared and issued in early May. At the end of 2019 and 2020, the common stock was selling for 25.75 and 32.20, respectively. The company is subject to a 30% income tax rate. Required: 1. Prepare the comparative 2019 and 2020 income statements (multiple-step), and the related note that would appear in Anokas 2020 annual report. 2. Next Level Compute the price/earnings ratio for 2020. How does this compare to 2019? Why is it different?
Stock Dividend The balance sheet of Cohen Enterprises includes the following stockholders equity section: Required: On April 15, 2019, when its stock was selling for $18 per share, Cohen Enterprises issued a small stock dividend. After making the journal entry to recognize the stock dividend, Cohens total capital stock increased by $270,000. In percentage terms, what was the size of the stock dividend? Ignoring the small stock dividend discussed in Requirement 1, assume that on June 1, 2019, when its stock was selling for $22 per share, Cohen issued a large stock dividend. After making the journal entry to recognize the stock dividend, Cohens retained earnings decreased by $75,000. In percentage terms, what was the size of the stock dividend?
Statement of Stockholders' Equity At the end of 2019, Stanley Utilities Inc. had the following equity accounts and balances: During 2020, Haley engaged in the following transactions involving its equity accounts: Sold 5,000 shares of common stock for $19 per share. Sold 1.200 shares of 12%, $50 par preferred stock at $75 per share. Declared and paid cash dividends of $22,000. Repurchased 1,000 shares of treasury stock (common) for $24 per share. Sold 300 of the treasury shares for $26 per share. Required: Prepare the journal entries for Transactions a through e. Assume that 2020 net income was $123,700. Prepare a statement of stockholders equity at December 31, 2020.
Contributed Capital Adams Companys records provide the following information on December 31, 2019: Additional information: 1. Common stock has a 5 par value, 50,000 shares are authorized, 15,000 shares have been issued and are outstanding. 2. Preferred stock has a 100 par value, 3,000 shares are authorized, 800 shares have been issued and are outstanding. Two hundred shares have been subscribed at 120 per share. The stock pays an 8% dividend, is cumulative, and is callable at 130 per share. 3. Bonds payable mature on January 1, 2023. They carry a 12% annual interest rate, payable semiannually. Required: Prepare the Contributed Capital section of the December 31, 2019, balance sheet for Adams. Include appropriate parenthetical notes.
Chen Corporation began 2012 with the following stockholders equity balances: The following selected transactions and events occurred during the year: a. Issued 10,000 shares of common stock for 60,000. b. Purchased 1,200 shares of treasury stock for 4,800. c. Sold 2,000 shares of treasury stock for 11,000. d. Generated net income of 94,000. e. Declared and paid the full years dividend on preferred stock and a dividend of 1.00 per share on common stock outstanding at the end of the year. Chen Corporation maintains several paid-in capital accounts (Paid-in Capital in Excess of Par, Paid-in Capital from Treasury Stock, etc.) in its ledger, but combines them all as Additional paid-in capital when preparing financial statements. Open the file STOCKEQ from the website for this book at cengagebrain.com. Enter the formulas in the appropriate cells on the worksheet. Then fill in the columns to show the effect of each of the selected transactions and events listed earlier. Enter your name in cell A1. Save the completed worksheet as STOCKEQ2. Print the worksheet. Also print your formulas. Check figure: Total stockholders equity balance at 12/31/12 (cell G21). 398,800.
Chen Corporation began 2012 with the following stockholders equity balances: The following selected transactions and events occurred during the year: a. Issued 10,000 shares of common stock for 60,000. b. Purchased 1,200 shares of treasury stock for 4,800. c. Sold 2,000 shares of treasury stock for 11,000. d. Generated net income of 94,000. e. Declared and paid the full years dividend on preferred stock and a dividend of 1.00 per share on common stock outstanding at the end of the year. Chen Corporation maintains several paid-in capital accounts (Paid-in Capital in Excess of Par, Paid-in Capital from Treasury Stock, etc.) in its ledger, but combines them all as Additional paid-in capital when preparing financial statements. In the space provided below, prepare the stockholders equity section of Chen Corporations balance sheet as of December 31, 2012. Use proper headings and provide full disclosure of all appropriate information. Chens corporate charter authorizes the issuance of 1,000 shares of preferred stock and 100,000 shares of common stock.
Stock Dividends Crystal Corporation has the following information regarding its common stock: S10 par. with 500.000 shares authorized, 213,000 shares issued, and 183,700 shares outstanding. On August 22, 2019, Crystal declared and paid a 15% stock dividend when the market price of the common stock was $30 per share. Required: Prepare the journal entries to record declaration and payment of this stock dividend. Prepare the journal entries to record declaration and payment assuming it was a 30% stock dividend.

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