Pineview Co., organized on June 1, 2012 was authorized to issue stock as follows
ID: 2469570 • Letter: P
Question
Pineview Co., organized on June 1, 2012 was authorized to issue stock as follows 80,000 shares pf preferred 9% stock convertiable 100 par 500,000 shares of common stock 2.50 stated value During the remainder of Pineview Co.'s fiscal year ended Mat 31, 2013, the following transactions were completed in the order given: a.) 30,000 shares of preferred stock were subscribed for at $105, and 90,000 shares of common stock were subscribed for at $26. Both subscriptions were payable 30% upon subscription, the balance in one payment. b.) The second subscription payment was received, except one subscriber for 6,000 shares of common stock defaulted one payment. The full amount paid by this subscriber was returned, and all of the fully paid stock was issued. c.) 15,000 shares of common stock were reacquired by purchase at $28. (Treasury stock is recorded at cost.) d.) Each share of preferred stock was converted into four shares of common stock. e.) The treasury stock was exchanged for machinery with a fair market value of $430,000. f.) There was a 2-for-1 stock split, and the stated value of the new common stock is $1.25. g.) Net income was $83,000. Assume the revenues and expenses have been closed to a temporary account, Income Summary. 1. Give the journal entries to record these transactions. (For net income, give the entry to close the income summary account to Retained Earnings.) 2. Prepare the Stockholders' Equity section as of May 31, 2013.
Explanation / Answer
Ans;
No No No No No a) Preferred stock subscription 3150000 Common stock subscription 2340000 Preferred stock subscribed 30000 Paid in capital in excess par -prefered 3120000 Common stock subscribed 225000 Paid in capital excess of stated value common 2115000 Cash 1647000 Preferred stock subscription 945000 Common stock subscription 702000 b) Cash 3733800 Preferred stock subscription 2205000 Common stock subscription 1528800 Preferred stock subscribed 30000 Common stock subscribed 210000 Preferred stock 30000 Common stock 210000 Common stock subscribed 15000 Paid in capital excess of stated value common 141000 Common stock subscription 109200 Cash 46800 c) Treasury Stock 420000 Cash 420000 d) Preferred stock 30000 Paid in capital in excess par -prefered 3120000 Common stock 300000 Paid in capital excess of stated value common 2850000 e) Machinery 430000 Treasury Stock 420000 Paid in capital treasury stock 10000 f) No Entry g) Income Summary 83000 Retained Earning 83000 Pineview Co. Balance Sheet (Partial) May 31, 2013 Stockholders Equity Paid in Capital Common Stock $ 1.25 Stated Value (500000 Share Authorised, 408000 share issued) 510000 Paid in capital excess stated value 4824000 Paid in capital treasury stock 10000 Total contributed Capital 5344000 Retained Earning 83000 Total Stockholders Equity 5427000