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$400,000Common 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. ### General Journal Entries#### Date | Description | Debit | Credit**Jan. 01**- (Memorandum) Common Stock split 2 for 1.**Mar. 31**- Premium on Bonds Payable | $100,000 | $0- Common Stock | $0 | $24,000- Common Stock | $0 | $76,000*To record conversions of bonds.***Jun. 01**- Equipment | $40,000 | $0- Paid-in-Capital in Excess of Par Value - Preferred Stock | $0 | $20,000- Preferred Stock | $0 | $20,000*Issued preferred stock in exchange for equipment.***Sept. 01**- Treasury Stock | $0 | $0*Purchased treasury stock.***Nov. 21**- Common Stock | $0 | $0*Issued common stock.***Dec. 28**- Paid-in-Capital from Treasury Stock | $0 | $0*To record sale of treasury stock.* The image displays a set of T-accounts used for managing stockholders' equity accounts, showing balances and activity across different dates. Here’s a detailed transcription and explanation:1. **Cash Account:** - Sep. 01: Debit 0 | Credit 0 - Nov. 21: Debit 0 | Credit 0 - Dec. 28: Debit 0 | Credit 02. **Bonds Payable:** - Mar. 31: Debit 0 | Credit 03. **Premium on Bonds Payable:** - Mar. 31: Debit 0 | Credit 04. **Equipment:** - Jun. 01: Debit 0 | Credit 05. **Preferred Stock:** - Beginning Balance: Debit 0 | Credit 0 - Jun. 01: Debit 0 | Credit 0 - Balance: Debit 0 | Credit 06. **Common Stock:** - Beginning Balance: Debit 0 | Credit 0 - Jan. 01: (2 for 1 split): Debit 0 | Credit 0 - Mar. 31: Debit 0 | Credit 0 - Nov. 21: Debit 0 | Credit 07. **Paid-in Capital in Excess of Par Value - Preferred Stock:** - Beginning Balance: Debit 0 | Credit 0 - Jun. 01: Debit 0 | Credit 0 - Balance: Debit 0 | Credit 08. **Paid-in Capital in Excess of Par Value - Common Stock:** - Beginning Balance: Debit 0 | Credit 0 - Mar. 31: Debit 0 | Credit 0 - Nov. 21: Debit 0 | Credit 0 - Balance: Debit 0 | Credit 09. **Paid-in Capital from Treasury Stock:** - Dec. 28: Debit 0 | Credit 0 - Balance: Debit 0 | Credit 010. **Treasury Stock - Common:** - Sep. 01: Debit 0 | Credit 0 - Dec. 28: Debit 0 | Credit 011. **Retained Earnings:** - Balance: Debit 0 | Credit 0

According to the given question, we are required to prepare the T-accounts for the stockholders'…

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.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q