The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020. In addition, E&B Comic Bookstore Company’s charter will authorize 1,200,000 shares of common stock (to be divided into two classes (700,000 shares class A -voting rights and 500,000 shares class B -nonvoting rights) and 400,000, $X par value (see info below), 5% cumulative preferred stock. Issued 30% of authorized shares of class A common stock. Stock has par value of $20.00 per share and was issued at $ 28.00 per share. Issued 30% shares of no par class B stock. Issued 50% share of preferred stock at par stock value. Exchange 40% shares of class A common stock for Office Furniture and Equipment with an appraised value of $ 4,000,000.00 and Motor Truck with an appraised value of $10,000,000.00. Earned Net income is $1,500,000. Declared interim dividends for preferred shareholders as well as $.80 per share to common stockholders. 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 declared. • Close out dividend to retained earning

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their
decision-making process. They assume that the company will be formed on January 1, 2020. In addition, E&B Comic
Bookstore Company’s charter will authorize 1,200,000 shares of common stock (to be divided into two classes (700,000
shares class A -voting rights and 500,000 shares class B -nonvoting rights) and 400,000, $X par value (see info below),
5% cumulative preferred stock.

Issued 30% of authorized shares of class A common stock. Stock has par value of $20.00 per share and was issued at $ 28.00 per share.
Issued 30% shares of no par class B stock.
Issued 50% share of preferred stock at par stock value.
Exchange 40% shares of class A common stock for Office Furniture and Equipment with an appraised value of $ 4,000,000.00 and Motor Truck with an appraised value of $10,000,000.00.
Earned Net income is $1,500,000.

Declared interim dividends for preferred shareholders as well as $.80 per share to common stockholders.

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 declared.
• Close out dividend to retained earning

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