Prepare the stockholders equity section Problem I. (40 Points). Waho $10 o, Inc.
ID: 2583941 • Letter: P
Question
Prepare the stockholders equity section Problem I. (40 Points). Waho $10 o, Inc., an internet media corporation, has two classes of capital stock outstanding: 8%, par preferred stock and $8 par common stock. At December 31, 2016, the following accounts were included in stockholders' equity of Wahoo, Inc. *Preferred Stock, 180,000 shares issued *Common Stock, 1,200,000 shares issued Paid-in Capital in Excess of Par-Preferred Paid-in Capital in Excess of Par- Common Retained Earnings $1,800,000 9,600,000 200,000 27,000,000 6,000,000 *authorized shares are ignored in this problem. Instructions: (1) Journalize the following transactions (below) in the date order given. Show your work to receive credit. (2) After recording the transactions in (1), post the details to the T-accounts provided. Beginning balances are provided for any accounts that had balances at January 1, 2017. (3) After posting the transactions to the T-accounts in (2), prepare the Stockholders' Equity section of the balance sheet of Wahoo, Inc, at December 31 2017. Transactions affecting stockholders' equity during 2017:
Explanation / Answer
(1).
(2).
(3).
Date Account Titles and Explanation Debit Credit 2017 Jan. 3 Cash (30000 x $18) 540000 Common stock (30000 x $8) 240000 Paid-in capital in excess of par-common (30000 x $10) 300000 (To record issue of common stock) Feb. 14 Cash (40000 x $24) 960000 Preferred stock (40000 x $10) 400000 Paid-in capital in excess of par-preferred (40000 x $14) 560000 (To record issue of preferred stock) May. 23 Retained earnings (246000 x $14) 3444000 Common Stock Dividend Distributable [20% x (1200000 + 30000) x $14] 3444000 (To record declaration of stock dividend) Jun. 15 No entry required Jun. 29 Common Stock Dividend Distributable 3444000 Common stock (246000 x $8) 1968000 Paid-in capital in excess of par-common (246000 x $6) 1476000 (To record distribution of common stock dividend) Jul. 2 Treasury stock-common (60000 x $11) 660000 Cash 660000 (To record purchase of treasury stock-common) Nov. 9 Cash (30000 x $8) 240000 Retained earnings (30000 x $3) 90000 Treasury stock-common (30000 x $11) 330000 (To record sale of treasury stock-common) Dec. 18 Retained earnings 320600 Dividends payable-Preferred [8% x (1800000 + 400000)] 176000 Dividends payable-Common [$0.10 x (1200000+30000+246000-60000+30000)] 144600 (To record declaration of cash dividends) Dec. 31 Income summary 1400000 Retained earnings 1400000 (To close net income to retained earnings)