
(1)
Shareholders’ Equity Transactions
The claims of owners on a company’s resources, after the liabilities are paid off, are referred to as stockholders’ equity. Therefore, stockholders’ equity is sometimes referred to as net worth of owners or shareholders or stockholders.
To journalize: The events and transactions that affect the shareholders’ equity of Corporation
(1)

Explanation of Solution
Journalize the transactions related to shareholders’ equity for the period 2016through2018 for Incorporation AI.
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | Cash | 480,000,000 | |||
Preferred Stock |
10,000,000 | ||||
Paid-in Capital–Excess of Par, Preferred |
470,000,000 | ||||
(To record issue of |
Table (1)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | Cash | 70,000,000 | |||
Common Stock |
7,000,000 | ||||
Paid-in Capital–Excess of Par, Common |
63,000,000 | ||||
(To record issue of common stock) |
Table (2)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | 1,000,000 | ||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
(To record declaration of cash dividends) |
Table (3)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | |||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
Cash | 1,000,000 | ||||
(To record distribution of cash dividends) |
Table (4)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | Retained Earnings | 16,000,000 | |||
Cash Dividends Payable, Common | 16,000,000 | ||||
(To record declaration of cash dividends) |
Table (5)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | Cash Dividends Payable, Common | 16,000,000 | |||
Cash | 16,000,000 | ||||
(To record distribution of cash dividends) |
Table (6)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2016 | Income Summary | 290,000,000 | |||
Retained Earnings | 290,000,000 | ||||
(To record closing of net income to income summary) |
Table (7)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | Common Stock (1) | 3,000,000 | |||
Paid-in Capital–Excess of Par (3) | 27,000,000 | ||||
Retained Earnings | 20,000,000 | ||||
Cash (4) | 50,000,000 | ||||
(To record retirement of common stock) |
Table (8)
Working Notes:
Compute common stock value.
Compute excess of par value of shares.
Compute paid-in capital in excess of par value.
Note: Refer to Equation (2) for values and computations of excess of par value per share.
Compute cash paid amount.
Note: Refer to Equations (1), and (3) for values and computations of common stock, and paid-in capital-excess of par value.
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Retained Earnings | 1,000,000 | ||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
(To record declaration of cash dividends) |
Table (9)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
Cash | 1,000,000 | ||||
(To record distribution of cash dividends) |
Table (10)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Retained Earnings | 20,000,000 | ||||
Cash Dividends Payable, Common | 20,000,000 | ||||
(To record declaration of cash dividends) |
Table (11)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Cash Dividends Payable, Common | 20,000,000 | ||||
Cash | 20,000,000 | ||||
(To record distribution of cash dividends) |
Table (12)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Paid-in Capital–Excess of Par, Preferred | 5,000,000 | ||||
Preferred Stock | 5,000,000 | ||||
(To record distribution of stock dividend) |
Table (13)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2017 | |||||
Income Summary | 380,000,000 | ||||
Retained Earnings | 380,000,000 | ||||
(To record closing of net income to income summary) |
Table (14)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Retained Earnings | 65,000,000 | ||||
Common Stock | 6,000,000 | ||||
Paid-in Capital–Excess of Par | 59,000,000 | ||||
(To record declaration of common stock dividend) |
Table (15)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Retained Earnings | 1,000,000 | ||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
(To record declaration of cash dividends) |
Table (16)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Cash Dividends Payable, Preferred | 1,000,000 | ||||
Cash | 1,000,000 | ||||
(To record distribution of cash dividends) |
Table (17)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Retained Earnings | 22,000,000 | ||||
Cash Dividends Payable, Common | 22,000,000 | ||||
(To record declaration of cash dividends) |
Table (18)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Cash Dividends Payable, Common | 22,000,000 | ||||
Cash | 22,000,000 | ||||
(To record distribution of cash dividends) |
Table (19)
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
2018 | |||||
Income Summary | 412,000,000 | ||||
Retained Earnings | 412,000,000 | ||||
(To record closing of net income to income summary) |
Table (20)
(2)
To prepare: Stockholders’ equity section of
(2)

Explanation of Solution
Prepare Stockholders’ equity section of balance sheet for Incorporation IA at December 31, 2018 and 2017.
Incorporation IA | ||
Partial balance sheet (Stockholders’ Equity Section) | ||
December 31, 2018 and 2017 | ||
2018 | 2017 | |
Paid-in Capital | Amount ($) | Amount ($) |
Preferred stock | $15,000,000 | $15,000,000 |
Common stock | 65,000,000 | 59,000,000 |
Additional paid-in capital | 1,055,000,000 | 996,000,000 |
Total paid-in capital | 1,135,000,000 | 1,070,000,000 |
Retained earnings | 2,814,000,000 | 2,490,000,000 |
Total stockholders’ equity | 3,9249,000,000 | 3,560,000,000 |
Table (21)
Stockholders’ equity section: Partial balance sheet that reports the details of stockholders’ equity in detail is referred to as stockholders’ equity section of balance sheet.
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