Stockholders’ Equity Transactions, Journal Entries, and T-AccountsThe stockholders’ equity of Fremantle Corporation at January 1 follows:8 Percent preferred stock, $100 par value, 20,000 shares authorized; 4,000 shares issued and outstanding$400,000Common stock, $1 par value, 100,000 shares authorized; 40,000 shares issued and outstanding40,000Paid-in capital in excess of par value—Preferred stock200,000Paid-in capital in excess of par value—Common stock800,000Retained earnings550,000Total Stockholders’ Equity$1,990,000 The following transactions, among others, occurred during the year:Jan.1Announced a 2-for-1 common stock split, reducing the par value of the common stock to $0.50 per share.Mar.31Converted $80,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.June1Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock.Sept.1Acquired 10,000 shares of common stock for cash at $20 per share.Nov.21Issued 5,000 shares of common stock at $22 cash per share.Dec.28Sold 1,000 treasury shares at $23 per share. 31Closed net income of $103,000, to the Retained Earnings account. Requireda. Set up T-accounts for the stockholders’ equity accounts as of the beginning of the year and enter the January 1 balances. ### Journal Entries for Stock TransactionsBelow are the journal entries for the given transactions, along with explanations for each entry. These transactions affect the stockholders' equity accounts and include events like stock splits, bond conversions, and treasury stock activities.---**Date: Jan. 01** - **Description:** Common Stock split 2 for 1 (Memorandum entry) - This entry is informational and does not have financial implications requiring debits or credits.---**Date: Mar. 31** - **Description:** Bonds Payable Conversion - **Debit:** - Bonds Payable: $100,000 - **Credit:** - Premium on Bonds Payable: $24,000 - Common Stock: $76,000 - To record conversion of bonds into common stock.---**Date: Jun. 01** - **Description:** Issuance of Preferred Stock for Equipment - **Debit:** - Equipment: $40,000 - **Credit:** - Preferred Stock: $20,000 - Paid-in-Capital in Excess of Par Value - Preferred Stock: $20,000 - To record issuance of preferred stock in exchange for equipment.---**Date: Sept. 01** - **Description:** Purchase of Treasury Stock - **Debit:** - Treasury Stock - Common - **Credit:** - Cash - To record the purchase of treasury stock. (Specific amounts not provided)---**Date: Nov. 21** - **Description:** Issuance of Common Stock - **Debit:** - Cash - **Credit:** - Common Stock - Paid-in-Capital in Excess of Par Value - Common Stock - To record issuance of common stock. (Specific amounts not provided)---**Date: Dec. 28** - **Description:** Sale of Treasury Stock - **Debit:** - Cash - **Credit:** - Paid-in-Capital from Treasury Stock - Treasury Stock - Common - To record the sale of treasury stock. (Specific amounts not provided)---This series of transactions demonstrate common stock activities, including conversions, exchanges, purchases, sales, and issuances, impacting stockholder equity. Each debit and credit aligns with proper accounting conventions to reflect changes in company financials

Stockholders’ Equity Transactions, Journal Entries, and T-Accounts The stockholders’ equity of Fremantle Corporation at January 1 follows: 8 Percent preferred stock, $100 par value, 20,000 shares authorized; 4,000 shares issued and outstanding $400,000 Common stock, $1 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 40,000 Paid-in capital in excess of par value—Preferred stock 200,000 Paid-in capital in excess of par value—Common stock 800,000 Retained earnings 550,000 Total Stockholders’ Equity $1,990,000 The following transactions, among others, occurred during the year: Jan. 1 Announced a 2-for-1 common stock split, reducing the par value of the common stock to $0.50 per share. Mar. 31 Converted $80,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 125 shares of common stock. June 1 Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at $20 per share. Nov. 21 Issued 5,000 shares of common stock at $22 cash per share. Dec. 28 Sold 1,000 treasury shares at $23 per share. 31 Closed net income of $103,000, to the Retained Earnings account. Required a. Set up T-accounts for the stockholders’ equity accounts as of the beginning of the year and enter the January 1 balances.

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Stockholders’ Equity Transactions, Journal Entries, and T-Accounts

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

8 Percent preferred stock, $100 par value, 20,000 shares
authorized; 4,000 shares issued and outstanding	$400,000
Common stock, $1 par value, 100,000 shares
authorized; 40,000 shares issued and outstanding	40,000
Paid-in capital in excess of par value—Preferred stock	200,000
Paid-in capital in excess of par value—Common stock	800,000
Retained earnings	550,000
Total Stockholders’ Equity	$1,990,000

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

Jan.	1	Announced a 2-for-1 common stock split, reducing the par value of the common stock to $0.50 per share.
Mar.	31	Converted $80,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.
June	1	Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock.
Sept.	1	Acquired 10,000 shares of common stock for cash at $20 per share.
Nov.	21	Issued 5,000 shares of common stock at $22 cash per share.
Dec.	28	Sold 1,000 treasury shares at $23 per share.
	31	Closed net income of $103,000, to the Retained Earnings account.