Chapter 20, Problem 1MP

Stockholders’ equity accounts and other related accounts of Gonzales Company as of January 1, 20--, the beginning of its fiscal year, are shown below.

Preferred stock subscriptions receivable    $ 50,000

Preferred stock, $10 par, 9% (200,000 shares authorized; 20,000 shares issued)    200,000

Preferred stock subscribed (10,000 shares)    100,000

Paid-in capital in excess of par—preferred stock    40,000

Common stock, $10 par (100,000 shares authorized; 60,000 shares issued)    600,000

Paid-in capital in excess of par—common stock    250,000

Retained earnings    750,000

During 20--, Gonzales Company completed the following transactions affecting stockholders’ equity:

1. (a) Received $20,000 for the balance due on subscriptions for 4,000 shares of preferred stock with a par value of $40,000 and issued the stock.
2. (b) Purchased 10,000 shares of common treasury stock for $18 per share.
3. (c) Received subscriptions for 10,000 shares of common stock at $19 per share, collecting down payments of $45,000.
4. (d) Issued 15,000 shares of common stock in exchange for land with a fair market value of $290,000.
5. (e) Sold 5,000 shares of common treasury stock for $100,000.
6. (f) Issued 10,000 shares of preferred stock at $11.50 per share, receiving cash.
7. (g) Sold 3,000 shares of common treasury stock for $17 per share.

REQUIRED

1. 1. Prepare general journal entries for the transactions, identifying each transaction by letter.
2. 2. Post the journal entries to appropriate T accounts. The cash account has a beginning balance of $300,000.
3. 3. Prepare the stockholders’ equity section of the balance sheet as of December 31, 20--. Net income for the year was $825,000 and dividends of $400,000 were paid.