Financial Accounting
Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter 10, Problem 10.1APCP

1.

To determine

To record: The each transaction.

1.

Expert Solution
Check Mark

Explanation of Solution

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.

Par value: It refers to the value of a stock that is stated by the corporation’s charter. It is also known as face value of a stock.

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.

Prepare the journal entry to record each of the transactions as follows:

DateAccount Title and ExplanationDebit ($)Credit($)
2020   
July 2Cash (100,000×$12) 1,200,000 
 Common stock (100,000×$1)  100,000
 Additional paid in capital (difference)  1,100,000
 (To record issuance of 100,000 shares of common stock for $12 per share)  
 
September 10Treasury stock (10,000×$15) 150,000 
Cash 150,000
 (To record the purchase of 10,000 shares of treasury stock)  
 
November 15Cash (5,000×$16) 80,000 
Treasury stock (5,000×$15)  75,000
 Additional paid in capital(difference) 5,000
 (To record the reissue of treasury stock above the cost)  
 
December 1Dividends 115,000 
 Dividends Payable 115,000
 (To record the declaration of cash dividend)  
 
December 31Dividends Payable115,000 
Cash 115,000
 (To record the payment of cash dividend)  

Table (1)

2.

To determine

To prepare: The stockholders’ equity section of the balance sheet for G Adventures as of December 31, 2020.

2.

Expert Solution
Check Mark

Explanation of Solution

Stockholders’ Equity Section: It is refers to the section of the balance sheet that shows the available balance of each stockholder’s equity account as on reported date at the end of the financial year.

Prepare the stockholders’ equity section of the balance sheet for G Adventures as of December 31, 2020 as follows:

G Adventures
Balance sheet (Partial)
Stockholders’ Equity SectionAmount ($)Amount ($)
Paid-in Capital:  
Common stock, $1 par value, 120,000 shares issued 120,000
Additional paid-in capital:  

Paid-in capital – excess over par value,

common stock

1,100,000(1) 

Paid-in capital – excess over par value,

Treasury stock

5,000(2)1,105,000
Total paid-in capital 1,225,000
Retained earnings 175,000(4)
Treasury stock, 5,500 shares (75,000) (3)
Total stockholders’ equity 1,325,000

Working note:

Compute paid in capital in excess of par for common stock:

Paid in capital in excess of par =(No of shares × (Issued price Par value))=100,000×($12$1.00)=$1,100,000 (1)

Compute paid in capital in excess of par for treasury stock:

Paid in capital in excess of par =(No of shares × (Issued price Par value))=5,000×($15.00$16.00)=$5,000 (2)

Compute the par value of 5,500 treasury stock:

 Par value =No of shares × Par value=5,000×$15.00=$75,000 (3)

Compute the amount of retained earnings:

Retained earnings =[((Beginning balance of retained earnings)+Net income)Dividends paid]=[($140,000 + $150,000)$115,000]=$290,000$115,000=$175,000 (4)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What amount should be reported on the balance sheet for inventory of this general accounting question?
Michael is a 40% partner in the Juno Partnership. At the beginning of the tax year, Michael's basis in the partnership interest was $80,000, including his share of partnership liabilities. During the current year, Juno reported an ordinary income of $50,000. In addition, Juno distributed $7,500 to each of the partners ($22,500 total). At the end of the year, Michael's share of partnership liabilities increased by $15,000. What is Michael's basis in the partnership interest at the end of the year?
Financial Accounting Question please solve this one

Chapter 10 Solutions

Financial Accounting

Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - How is the accounting for a repurchase of a...Ch. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Prob. 17RQCh. 10 - 18.What happens to the par value, the shares...Ch. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 10.1BECh. 10 - Prob. 10.2BECh. 10 - Record issuance of common stock (LO102) Western...Ch. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Recognize preferred stock features (LO103) Match...Ch. 10 - Determine the amount of preferred Stock dividends...Ch. 10 - Prob. 10.8BECh. 10 - Prob. 10.9BECh. 10 - Record cash dividends (LO105) Divine Apparel has...Ch. 10 - Prob. 10.11BECh. 10 - Prob. 10.12BECh. 10 - Indicate effects on total stockholders equity...Ch. 10 - Prepare the stockholders equity section (LO107)...Ch. 10 - Prob. 10.15BECh. 10 - Prob. 10.1ECh. 10 - Prob. 10.2ECh. 10 - Prob. 10.3ECh. 10 - Prob. 10.4ECh. 10 - Record common stock, preferred stock, and dividend...Ch. 10 - Prob. 10.6ECh. 10 - Prob. 10.7ECh. 10 - Record cash dividends (LO105) On March 15,...Ch. 10 - Prob. 10.9ECh. 10 - Record stock dividends and stock splits (LO106) On...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.12ECh. 10 - Indicate effects on total stockholders equity...Ch. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Calculate and analyze ratios (LO108) Financial...Ch. 10 - (LO 102, 104, 105, 108) On January 1, 2018, the...Ch. 10 - Prob. 10.1APCh. 10 - Prob. 10.2APCh. 10 - Indicate effect of stock dividends and stock...Ch. 10 - Prob. 10.4APCh. 10 - Understand stockholders equity and the statement...Ch. 10 - Record equity transactions and prepare the...Ch. 10 - Prob. 10.7APCh. 10 - Match terms with their definitions (LO101 to 108)...Ch. 10 - Record equity transactions and indicate the effect...Ch. 10 - Prob. 10.3BPCh. 10 - Prob. 10.4BPCh. 10 - Prob. 10.5BPCh. 10 - Record equity transactions and prepare the...Ch. 10 - Prob. 10.7BPCh. 10 - Prob. 10.1APCPCh. 10 - Financial Analysis American Eagle Outfitters, Inc....Ch. 10 - Prob. 10.3APFACh. 10 - Comparative Analysis Buckle American Eagle...Ch. 10 - Ethics Put yourself in the shoes of a company...Ch. 10 - Written Communication Preferred stock has...Ch. 10 - Earnings Management Renegade Clothing is...
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Text book image
Personal Finance
Finance
ISBN:9781337669214
Author:GARMAN
Publisher:Cengage