The stockholders' equity accounts of Karp Company at January 1, 2020, are as follows: Preferred Stock, 6%, $100 par $600,000 Common Stock, $5 par 500,000 190,000 Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock 297,500 Retained Earnings 800,000 Treasury Stock (10,000 shares) 100,000 There were no dividends in arrears on preferred stock. During 2020, the company had the following transactions and events. July 1 Declared a $1 cash dividend per share on common stock. Sept. Paid the cash dividend declared on July 1. 1 Oct 1 Reissued the treasury stock for $100,000 Declared and issued a 10% stock dividend on common stock when the market price of the stock was $15 per share. Declared a 6% cash dividend on preferred stock payable January 15, 2021. Determined that net income for the year was $350,000. Closed income summary. Closed the dividends accounts. Dec. 1 15 31 (a)Journalize the transactions, events, and closing entries for net income and dividends. (b) Enter the beginning balances in the accounts, and post to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a retained earnings statement for the year. It was discovered that 2019 net income was understated by $50,000.
The stockholders' equity accounts of Karp Company at January 1, 2020, are as follows: Preferred Stock, 6%, $100 par $600,000 Common Stock, $5 par 500,000 190,000 Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock 297,500 Retained Earnings 800,000 Treasury Stock (10,000 shares) 100,000 There were no dividends in arrears on preferred stock. During 2020, the company had the following transactions and events. July 1 Declared a $1 cash dividend per share on common stock. Sept. Paid the cash dividend declared on July 1. 1 Oct 1 Reissued the treasury stock for $100,000 Declared and issued a 10% stock dividend on common stock when the market price of the stock was $15 per share. Declared a 6% cash dividend on preferred stock payable January 15, 2021. Determined that net income for the year was $350,000. Closed income summary. Closed the dividends accounts. Dec. 1 15 31 (a)Journalize the transactions, events, and closing entries for net income and dividends. (b) Enter the beginning balances in the accounts, and post to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a retained earnings statement for the year. It was discovered that 2019 net income was understated by $50,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The stockholders' equity accounts of Karp Company at January 1, 2020, are as follows:
Preferred Stock, 6%, $100 par
$600,000
Common Stock, $5 par
500,000
Paid-in Capital in Excess of Par-Preferred Stock
190,000
Paid-in Capital in Excess of Par-Common Stock
297,500
Retained Earnings
800,000
Treasury Stock (10,000 shares)
100,000
There were no dividends in arrears on preferred stock. During 2020, the company had the following
transactions and events.
July 1 Declared a $1 cash dividend per share on common stock.
Sept.
Paid the cash dividend declared on July 1.
1
Oct 1
Reissued the treasury stock for $100,000
Dec. 1
Declared and issued a 10% stock dividend on common stock when the market price of the
stock was $15 per share.
15
31
Declared a 6% cash dividend on preferred stock payable January 15, 2021.
Determined that net income for the year was $350,000. Closed income summary. Closed the
dividends accounts.
(a) Journalize the transactions, events, and closing entries for net income and dividends.
(b) Enter the beginning balances in the accounts, and post to the stockholders' equity accounts.
(Note: Open additional stockholders' equity accounts as needed.)
(c)Prepare a retained earnings statement for the year. It was discovered that 2019 net income was
understated by $50,000.
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