Problem 13-3A. The stockholders\' equity accounts of Castle Corporation on Janua
ID: 2445706 • Letter: P
Question
Problem 13-3A.
The stockholders' equity accounts of Castle Corporation on January 1, 2014, were as follows.
During 2014, the corporation had the following transactions and events pertaining to its stockholders' equity.
Feb. 1 Issued 25,400 shares of common stock for $116,800.
Apr. 14 Sold 5,700 shares of treasury stock-common for $33,600.
Sept. 3 Issued 5,200 shares of common stock for a patent valued at $35,800.
Nov. 10 Purchased 1,100 shares of common stock for the treasury at a cost of $6,100.
Dec. 31 Determoned that net income for the year was $419,400.
No dividends were declared during the year.
a. Journalize the transactions and the closing entry for net income.
b. Enter the beginning balances in the accounts, and post the journal entries to the stocjholders' equity accounts.
c. Prepare a stockholders' equity section at December 31, 2014, including the disclosure of the preferred dividends in arrears (Balance sheet (Partial) December 31, 2014)
Preferred Stock (8%, $49 par, cummulative, 10,500 shares authorized) $32,000 Common Stock ($1 stated avlue, 1,924,300 shares authorized 1,156,300 Paid-in Capital in Excess of Par-Preferred Stock 147,200 Paid-in CApital in Excess of Stated Value-Common Stock 1,451,000 Retained Earnings 1,794,500 Treasury Stock (10,800 common shares) 54,000Explanation / Answer
a Date Description Debit Credit 1-Feb Cash $116,800 Common Stock $25,400 Paid in capital excess $91,400 14-Apr Cash $33,600 Common Stock $5,700 (5700*1) Paid in Capital (excess) $27,900 (5700*($5.89-$1)) 3-Sep patent $35,800 Common stock $5,200 (5200*$1) paid in capital (Excess) $30,600 (5200*($6.88-$1)) 10-Nov common stock $1,100 (1100*1) Paid in capital $5,000 Cash $6,100 31-Dec Income summary $419,400 Retained earnings $419,400 b) common stock issued(open) 1,156,300 Less:issued $25,400 $5,700 $5,200 Add purchased $1,100 Common stock (closing) $1,121,100 Paid-in CApital in Excess of Stated Value-Common Stock 1,451,000 Add Premium issued $91,400 Sold at premium $27,900 Patented at excess value $30,600 Less Purchased at premium $5,000 Closing figure $1,595,900 Retained earnings (opening) 1,794,500 Add:Income $419,400 Closing balance 2,213,900