You are engaged in the audit of Phoenix Corp., a new client, at the close of its first fiscal year, April 30, 20X1. The accounts had been closed before the time you began your year-end fieldwork. You review the following stockholders€™ equity accounts in the general ledger: other information in your working papers include the following: 1. Phoenix's articles of incorporation filed April 17, 20X0, authorized 100,000 shares of non-par-value capital stock. 2. Directors minutes include the following resolutions: 4/18/X0 Established $50 per share stated value for capital stock. 4/30/X0 Authorized issue of 10,000 shares to an underwriting syndicate for $75 per share. 9/13/X0 Authorized acquisition of 1,000 shares from a dissident holder at $80 per share. 2/1/X1 Authorized reissue of 500 treasury shares at $85 per share. 4/28/X1 Declared 10 percent stock dividend, payable May 18, 20X1, to stockholders of record May 4, 20X1. 3. The following costs of the May 1, 20X0, and February 2, 20X1, stock issuances were charged to the named expense accounts: Printing Expense, $2,500; Legal Fees, $17,350; Accounting Fees, $12,000; and SEC Fees, $150. 4. Market values for Phoenix Corp. capital stock on various dates were: 9/13/X0 $78.50 2/2/X1 $85.00 9/14/X0 $79.00 2/28/X1 $90.00 5. Phoenix Corp.'s combined federal and state income tax rates total 55 percent. a. Prepare the necessary adjusting journal entries at April 30, 20X1. b. Prepare the stockholders equity section of Phoenix Corp.'s April 30, 20X1, balance sheet.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are engaged in the audit of Phoenix Corp., a new client, at the close of its first fiscal year, April 30, 20X1. The accounts had been closed before the time you began your year-end fieldwork.
You review the following stockholders€™ equity accounts in the general ledger:

other information in your working papers include the following:

1. Phoenix's articles of incorporation filed April 17, 20X0, authorized 100,000 shares of non-par-value capital stock.

2. Directors minutes include the following resolutions:

4/18/X0 Established $50 per share stated value for capital stock.
4/30/X0 Authorized issue of 10,000 shares to an underwriting syndicate for $75 per share.
9/13/X0 Authorized acquisition of 1,000 shares from a dissident holder at $80 per share.
2/1/X1 Authorized reissue of 500 treasury shares at $85 per share.
4/28/X1 Declared 10 percent stock dividend, payable May 18, 20X1, to stockholders of record May 4, 20X1.

3. The following costs of the May 1, 20X0, and February 2, 20X1, stock issuances were charged to the named expense accounts: Printing Expense, $2,500; Legal Fees, $17,350; Accounting Fees, $12,000; and SEC Fees, $150.

4. Market values for Phoenix Corp. capital stock on various dates were:

9/13/X0 $78.50 2/2/X1 $85.00
9/14/X0 $79.00 2/28/X1 $90.00

5. Phoenix Corp.'s combined federal and state income tax rates total 55 percent.

a. Prepare the necessary adjusting journal entries at April 30, 20X1.
b. Prepare the stockholders equity section of Phoenix Corp.'s April 30, 20X1, balance sheet.

Capital Stock
5/1/XO CR1
500,000
50,000
4/28/X1 J12-5
Paid-in Capital in Excess of Stated Value
5/1/XO CR1
250,000
2,500
2/2/X1 CR10
Retalned Earmings
4/28/X1 J12-5
50,000
A/30/X1 J12-14
800,000
Treasury Stock
9/14/XO CP5
80,000
2/2/X1 CR10
40,000
Income Summary
4/30/X1 J12-13
5,200,000
4/30/X1 J12-12
6,000,000
4/30/X1 J12-14
৪00,000

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