Scenario: Catherine and Tariq are opening a jewellery store with no competition in the area from which they intend to operate their business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow and as such, they feel the corporate form of operation will be best for the long term. They seek your advice. Requirements: Assume one year later (2019) the company CT Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information: The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: i) CT Jewelers purchased a piece of land from the original owner. In payment for the land, CT Jewelers issues 390,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $1,520,000 ii) The company sold 140,000 shares of common stock with $1 par value iii) Issued 26,000 shares of $22 par value preferred stock. Shares were issued at par. iv) Earned net income of $950,000 v) Dividend declared and paid - $0.15 per share on common stock vi) Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: Prepare the journal entries and closing entries for the above transaction Prepare the owner’s equity section of the balance sheet based on the info above
Scenario:
Catherine and Tariq are opening a jewellery store with no competition in the area from which they intend to operate their business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership,
Requirements:
Assume one year later (2019) the company CT Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s
The company’s charter authorizes 1,000,000 shares of common stock and 100,000
i) CT Jewelers purchased a piece of land from the original owner. In payment for the land, CT Jewelers issues 390,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of $1,520,000
ii) The company sold 140,000 shares of common stock with $1 par value
iii) Issued 26,000 shares of $22 par value preferred stock. Shares were issued at par.
iv) Earned net income of $950,000
v) Dividend declared and paid - $0.15 per share on common stock
vi) Dividend declared and paid - $5 per share on preferred stock
Using the information above and as guided:
- Prepare the journal entries and closing entries for the above transaction
- Prepare the owner’s equity section of the balance sheet based on the info above
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