Stockholders’ Equity: Transactions and Balance Sheet Presentation The following
ID: 2572760 • Letter: S
Question
Stockholders’ Equity: Transactions and Balance Sheet Presentation
The following is the stockholders’ equity of Clipper Corporation at January 1:
The following transactions, among others, occurred during the year:
Required
a. Set up T-accounts for the stockholders’ equity accounts as of the beginning of the year and enter the January 1 balances.
HINT: Complete part b. below prior to entering any additional T-account data.
b. Prepare journal entries for the given transactions and post them to the T-accounts above in part a. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders’ equity accounts.
c. Prepare the stockholders’ equity section of the balance sheet at December 31.
Do not use negative signs with your answers.
8 Percent preferred stock, $40 par value, 10,000 shares authorized; 7,000 shares issued and outstanding $280,000 Common stock, $20 par value, 50,000 shares authorized; 25,000 shares issued and outstanding 500,000 Paid-in capital in excess of par value—Preferred stock 70,000 Paid-in capital in excess of par value—Common stock 385,000 Retained earnings 238,000 Total Stockholders’ Equity $1,473,000Explanation / Answer
124000 General Journal Date Description Debit Credit Jan 15 Cash $124,000 (2000*62) Preferred stock $80,000 (2000*40) Paid-in-Capital in Excess of Par Value - Preferred Stock $44,000 (Issued shares of preferred stock) Jan 20 Cash $144,000 (4000*36) Common Stock $80,000 (4000*20) Paid-in-Capital in Excess of Par Value - Common Stock $64,000 (Issued common stock.) Jan 31 Bonds Payable $20,000 Discount on Bonds Payable $1,500 Common Stock $10,000 (20000/1000=20 bonds*25 sharesper bond*$20 per share Paid-in-Capital in Excess of Par Value - Common Stock $8,500 (To record conversions of bonds.) May 18 (Memorandum) Common Stock split 2 for 1. June 1 Equipment $40,000 Common Stock $40,000 (Issued common stock in exchange for equipment.) Sep 1 Treasury stock-3500shares at $18per share $63,000 (3500*18)= 63000 Cash $63,000 (Purchased treasury stock.) Oct 12 Cash $18,900 (900*21) Treasury stock $16,200 (900*18) Paid-in-Capital from Treasury Stock $2,700 (To record sale of Treasury stock) Dec 22 Cash $35,400 (600*59) Preferred stock $24,000 (600*40) Paid-in-Capital in Excess of Par Value - Preferred Stock $11,400 (Issued preferred stock.) Dec 28 Cash $17,600 (1100*16) Paid-in-Capital from Treasury Stock $2,200 Treasury stock $19,800 (1100*18) ( To record sale of treasury stock.) Cash Jan.15 $124,000 $124,000 Jan.20 $144,000 $268,000 Sept.01 $63,000 $205,000 Oct.12 $18,900 $223,900 Dec.22 $35,400 $259,300 Dec.28 $17,600 $276,900 Bonds Payable Jan.31 $20,000 Discount on Bonds Payable Jan.31 $1,500 Equipment Jun.01 $40,000 Preferred Stock Beg. $280,000 Jan.15 $80,000 Dec.22 $24,000 Bal. $384,000 Common Stock Beg. $500,000 Jan.20 $80,000 Jan.31 $10,000 May.18 (2 for 1 split) Jun.01 $40,000 Bal. $630,000 Paid-in-Capital in Excess of Par Value - Preferred Stock Beg. $70,000 Jan.15 $44,000 Dec.22 $11,400 Bal. $125,400 Paid-in-Capital in Excess of Par Value - Common Stock Beg. $385,000 Jan.20 $64,000 Jan.31 $10,000 Jun.01 $0 Bal. $459,000 Paid-in-Capital from Treasury Stock Oct.12 $2,700 Dec.28 $2,200 Bal. $500 Treasury Stock - Common Sept.01 $63,000 Oct.12 $16,200 Dec.28 $19,800 Bal. $27,000 Retained Earnings Bal. $238,000 Dec.31 $135,000 Bal. $373,000 Stockholders' Equity Paid in Capital Preferred stock $384,000 Common Stock $630,000 Paid-in capital in excess of par value—Preferred stock $125,400 Tresury stock-common $27,000 Paid-in capital in excess of par value—Common stock $459,000 Paid-in capital from—Treasury stock $500 Retained earnings $373,000 Total Stockholders’ Equity $1,944,900