The stockholders’ equity of Summit Corporation at January 1 follows:7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding$500,000Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding600,000Paid-in capital in excess of par value-Preferred stock24,000Paid-in capital in excess of par value-Common stock360,000Retained earnings325,000Total Stockholders' Equity$1,809,000 The following transactions, among others, occurred during the year:Jan.12Announced a 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization was increased to 300,000 shares.Mar.31Converted $40,000 face value of convertible bonds payable (the book value of the bonds was $46,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.June1Acquired equipment with a fair market value of $80,000 in exchange for 500 shares of preferred stock.Sept.1Acquired 10,000 shares of common stock for cash at $14 per share.Oct.12Sold 1,500 treasury shares at $19 per share.Nov.21Issued 5,000 shares of common stock at $14 per share.Dec.28Sold 1,200 treasury shares at $9 per share. 31Closed net income of $95,000 to the Retained Earnings account. Prepare journal entries for the given transactions and post them to the T-accounts. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders’ equity accounts.Prepare the stockholders’ equity section of the balance sheet at December 31. # General Journal### Date: Description, Debit, Credit---**Jan.12:**- *(Memorandum) Common Stock split 3 for 1.*---**Mar.31:**- **Bonds Payable** - Debit: $40,000 - Credit: $0- **Premium on Bonds Payable** - Debit: $6,000 - Credit: $0- **Common Stock** - Debit: $0 - Credit: $46,000- **Paid-in-Capital in Excess of Par Value - Common** - Debit: $0 - Credit: $125,000- *To record conversions of bonds.*---**Jun.01:**- **Equipment** - Debit: $80,000 - Credit: $0- **Preferred Stock** - Debit: $0 - Credit: $50,000- **Paid-in-Capital in Excess of Par Value - Preferred Stock** - Debit: $0 - Credit: $30,000- *Issued preferred stock in exchange for equipment.*---**Sept.01:**- **Treasury Stock - Common** - Debit: $140,000 - Credit: $0- **Cash** - Debit: $0 - Credit: $140,000- *Purchased treasury stock.*---**Oct.12:**- **Cash** - Debit: $28,500 - Credit: $0- **Treasury Stock - Common** - Debit: $0 - Credit: $18,750- **Paid-in-Capital from Treasury Stock** - Debit: $0 - Credit: $9,750- *Sold treasury stock.*---**Nov.21:**- **Cash** - Debit: $70,000 - Credit: $0- **Common Stock** - Debit: $0 - Credit: $25,000- **Paid-in-Capital in Excess of Par Value - Common** - Debit: $0 - Credit: $45,000- *Issued common stock.*---**Dec.28:**- **Cash** - Debit: $10,800 - Credit

JOURNAL ENTRIES Date Description Debit Credit…

Answered: Prepare journal entries for the given…

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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The stockholders’ equity of Summit Corporation at January 1 follows:

7 Percent preferred stock, $100 par value, 20,000 shares authorized;
5,000 shares issued and outstanding	$500,000
Common stock, $15 par value, 100,000 shares authorized;
40,000 shares issued and outstanding	600,000
Paid-in capital in excess of par value-Preferred stock	24,000
Paid-in capital in excess of par value-Common stock	360,000
Retained earnings	325,000
Total Stockholders' Equity	$1,809,000

The following transactions, among others, occurred during the year:

Jan.	12	Announced a 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization was increased to 300,000 shares.
Mar.	31	Converted $40,000 face value of convertible bonds payable (the book value of the bonds was $46,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.
June	1	Acquired equipment with a fair market value of $80,000 in exchange for 500 shares of preferred stock.
Sept.	1	Acquired 10,000 shares of common stock for cash at $14 per share.
Oct.	12	Sold 1,500 treasury shares at $19 per share.
Nov.	21	Issued 5,000 shares of common stock at $14 per share.
Dec.	28	Sold 1,200 treasury shares at $9 per share.
	31	Closed net income of $95,000 to the Retained Earnings account.

Prepare journal entries for the given transactions and post them to the T-accounts. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders’ equity accounts.
Prepare the stockholders’ equity section of the balance sheet at December 31.

# General Journal

### Date: Description, Debit, Credit

---

**Jan.12:**
- *(Memorandum) Common Stock split 3 for 1.*

---

**Mar.31:**
- **Bonds Payable**
- Debit: $40,000
- Credit: $0
- **Premium on Bonds Payable**
- Debit: $6,000
- Credit: $0
- **Common Stock**
- Debit: $0
- Credit: $46,000
- **Paid-in-Capital in Excess of Par Value - Common**
- Debit: $0
- Credit: $125,000
- *To record conversions of bonds.*

---

**Jun.01:**
- **Equipment**
- Debit: $80,000
- Credit: $0
- **Preferred Stock**
- Debit: $0
- Credit: $50,000
- **Paid-in-Capital in Excess of Par Value - Preferred Stock**
- Debit: $0
- Credit: $30,000
- *Issued preferred stock in exchange for equipment.*

---

**Sept.01:**
- **Treasury Stock - Common**
- Debit: $140,000
- Credit: $0
- **Cash**
- Debit: $0
- Credit: $140,000
- *Purchased treasury stock.*

---

**Oct.12:**
- **Cash**
- Debit: $28,500
- Credit: $0
- **Treasury Stock - Common**
- Debit: $0
- Credit: $18,750
- **Paid-in-Capital from Treasury Stock**
- Debit: $0
- Credit: $9,750
- *Sold treasury stock.*

---

**Nov.21:**
- **Cash**
- Debit: $70,000
- Credit: $0
- **Common Stock**
- Debit: $0
- Credit: $25,000
- **Paid-in-Capital in Excess of Par Value - Common**
- Debit: $0
- Credit: $45,000
- *Issued common stock.*

---

**Dec.28:**
- **Cash**
- Debit: $10,800
- Credit

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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