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 $95,000 to the Retained Earnings account. Prepare journal entries for the given transactions and post them to the T-accounts. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders’ equity accounts.Prepare the stockholders’ equity section of the balance sheet at December 31. DateDescriptionJan.12 (Memorandum) Common Stock split 3 for 1.Mar.31 Bonds PayablePremium on Bonds PayableCommon StockPaid-in-Capital in Excess of Par Value - Common STo record conversions of bonds.Jun.01 EquipmentPreferred StockPaid-in-Capital in Excess of Par Value - Preferred StockIssued preferred stock in exchange for equipment.Sept.01 Treasury Stock - CommonCashPurchased treasury stock.General JournalOct.12 CashTreasury Stock - CommonPaid-in-Capital from Treasury StockSold treasury stock.Nov.21 CashCommon StockPaid-in-Capital in Excess of Par Value - Common SIssued common stock.Dec.28 CashPaid-in-Capital from Treasury StockTreasury Stock - CommonTo record sale of treasury stock.OO41V6A$LADebit40,000$6,000 $0 ✓0 ✓80,0000 ✓0 ✓140,00028,50070,0000✔10,8002,400 x0Credit46,000 *125,000 *50,00030,000140,000018,750 x36,250 *25,00045,000015,600 x

JOURNAL ENTRIES Date Description Debit Credit…

Answered: Prepare journal entries for the given…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

100%

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.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps