Tony and Suzie purchased land costing $460,000 for a new camp in January 2014. N
ID: 2473243 • Letter: T
Question
Tony and Suzie purchased land costing $460,000 for a new camp in January 2014. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 10%, $10 par preferred and $1 par value common.
When the company began on July 1, 2012, Tony and Suzie each purchased 14,500 shares of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during 2014, its third year of operations:
Repurchase 11,400 shares of its own common stock (i.e., treasury stock) for $17 per share.
Declare a cash dividend on its common stock of $268,600 ($2 per share) to all stockholders of record on December 15. The dividend is payable on December 31.
3.
value:
10.00 points
Required information
Record each of these transactions. (Omit the "$" sign in your response.)
Great Adventures has net income of $179,000 in 2014. Retained earnings at the beginning of 2014 was $164,000. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2014. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)
Tony and Suzie purchased land costing $460,000 for a new camp in January 2014. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 10%, $10 par preferred and $1 par value common.
Explanation / Answer
July 2
Bank account Dr. $1568000 (112000*14)
To common stock a/c $112000
To excess paid in capital on common stock a/c $1456000
Sep10
Treasury stock a/c Dr $193800 (11400*17).
To bank a/c $193800 (11400*17)
Nov 15
Bank a/c Dr. 89300(4700*19)
To treasury stock a/c 79900(4700*17)
To paid in capital on treasury stock 9400 (4700*2)
Dec1
Dividend a/c Dr. 268600
To Divided declared a/c 268600
Dec31
Dividend declared a/c Dr 268600
To Bank a/c 268600
Paid in capital
Common stock 29000 share issued, 22300 outstanding $1 par value
29000
Common stock 112000 share issued during the year $1 par value
112000
Paid in capital in excess of par - common stock
1456000
Paid in capital in excess of par - treasury stock
9400
Retained Earning
Opening balance
164000
Income of the year
89600
Treasury stock at cost (6700*17)
-113900
Total stock holders equity
1746100
Paid in capital
Common stock 29000 share issued, 22300 outstanding $1 par value
29000
Common stock 112000 share issued during the year $1 par value
112000
Paid in capital in excess of par - common stock
1456000
Paid in capital in excess of par - treasury stock
9400
Retained Earning
Opening balance
164000
Income of the year
89600
Treasury stock at cost (6700*17)
-113900
Total stock holders equity
1746100