Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. 1. The company is desirous of comparing several financial transactions and possible outcomes to assist in guiding its decision-i the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company's king process. It is assumed that charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. Prepare the company's journal entries and statement of owner's equity. Based on the following information: Issued 45,500 shares of common stock. Stock has par value of $0.30 per share and was issued at $30.00per share. Issued 8,000 shares of preferred stock at par value as payment in exchange for legal services. • Exchanged 160,000 shares of common stock for land with an appraised value of $400,000.00 and a building with an appraised value of $650,000.00. Earned Net income $650,000.00. Paid dividends to preferred shareholders as well as $2 per share to common stockholders.
Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. 1. The company is desirous of comparing several financial transactions and possible outcomes to assist in guiding its decision-i the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company's king process. It is assumed that charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. Prepare the company's journal entries and statement of owner's equity. Based on the following information: Issued 45,500 shares of common stock. Stock has par value of $0.30 per share and was issued at $30.00per share. Issued 8,000 shares of preferred stock at par value as payment in exchange for legal services. • Exchanged 160,000 shares of common stock for land with an appraised value of $400,000.00 and a building with an appraised value of $650,000.00. Earned Net income $650,000.00. Paid dividends to preferred shareholders as well as $2 per share to common stockholders.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Steve Osbourne is considering opening a business, but
the major decision faced is how to organize the
business. Steve anticipates generating a massive profit
during the first year and that the following years should
be relatively profitable. Although he has enough to start
the business now as a partnership, he believes cash flow
may be an issue as the company grows. Steve believes
that the corporate form of operation will be his best
option and have hired you as a consultant and seek
your
advice.
1. The company is desirous of comparing several
financial transactions and possible outcomes to assist in
guiding its decision-making process. It is assumed that
the company will be formed on January 1, 2021 and
registered as Osbourne Corporation. The company's
charter will authorize 1,000,000 shares of common
stock and 400,000, $100 par value, 5% cumulative
preferred stock. Prepare the company's journal entries
and statement of owner's equity. Based on the following
information:
Issued 45,500 shares of common stock. Stock
has par value of $0.30 per share and was issued
at $30.00per share.
Issued 8,000 shares of preferred stock at par
value as payment in exchange for legal services.
• Exchanged 160,000 shares of common stock for
land with an appraised value of $400,000.00 and
a building with an appraised value of
$650,000.00.
Earned Net income $650,000.00.
Paid dividends to preferred shareholders as well
as $2 per share to common stockholders.
Transcribed Image Text:Using the info above and as a guide:
a) Prepare the journal entries with narrations to record
the following:
The issuances of stock.
Close out net income to retained earnings.
Dividend paid.
Close out dividend to retained earnings.
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