Chapter 13, Problem 13.6AP

(a)

To determine

Stockholder’s equity: The stockholder’s equity refers to the right of the stockholder’s in the business. The stockholder’s equity is built up of two items the paid-up capital from the shareholders and the retained earnings of the business.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

• To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.
• To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To prepare: The journal entries for the stock transactions.

(b)

To determine

To prepare: The stockholder’s equity section.