Problem 11-2A (Hi the question as it is from book of accounting page 629 ( finan
ID: 2597320 • Letter: P
Question
Problem 11-2A (Hi the question as it is from book of accounting page 629 ( financial accounting tools for business descion making kimmel) Problem 11-2A)
(
Date
Account Titles and Explanation
Debit
Credit
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
(To close cash dividends)
Dec. 31
.
(c) Prepare the shareholders’ equity section of the statement of financial position at December 31. (Enter account name only and do not provide descriptive information.)
Problem 11-2A (Hi the question as it is from book of accounting page 629 ( financial accounting tools for business descion making kimmel) Problem 11-2A)
Pembina Corporation, a publicly traded company, was organized on January 1, 2018. It is authorized to issue an unlimited number of $3 noncumulative preferred shares and an unlimited number of common shares. The following share transactions were completed during the company’s first year of operations: Jan. 10 Issued 1,030,000 common shares for $2 per share. Mar. 1 Issued 20,000 preferred shares for $50 per share. May 1 Issued 257,500 common shares for $3 per share. June 1 Reacquired and retired 9,000 common shares at $2 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. July 24 Issued 30,700 common shares for $110,000 cash and used equipment. The equipment originally cost $27,000. It now has a carrying amount of $13,500 and a current value of $14,500. The common shares were trading for $4 per share on this date. Sept. 4 Issued 11,000 common shares for $5 per share. Nov. 1 Issued 3,900 preferred shares for $50 per share. 20 Reacquired and retired 15,000 common shares at $4 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. Dec. 14 Declared a $77,000 cash dividend to the preferred shareholders, to shareholders of record on December 31, payable on January 10. 31 Reported net income of $1,180,000 for the year.Explanation / Answer
Journal Entries Jan. 10 Issued 1,030,000 common shares for $2 per share. Debit Credit Cash(1030000*2) 2060000 Common stock 2060000 Mar. 1 Issued 20,000 preferred shares for $50 per share. Cash(20000*50) 1000000 Preferred stock(20000*3) 60000 APIC-Preferred stock(20000*47) 940000 May 1 Issued 257,500 common shares for $3 per share. Cash(257500*3) 772500 Common stock 772500 June 1 Reacquired and retired 9,000 common shares at $2 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. Treasury stock(9000*2.2) 19800 Cash 18000 APIC-Treasury stock(Bal.fig) 1800 Common stock 18000 APIC-Treasury stock 1800 Treasury stock 19800 July 24 Issued 30,700 common shares for $110,000 cash and used equipment. The equipment originally cost $27,000. It now has a carrying amount of $13,500 and a current value of $14,500. The common shares were trading for $4 per share on this date. Cash 110000 Equipment 14500 Common stock 124500 Sept. 4 Issued 11,000 common shares for $5 per share. Cash (11000*5) 55000 Common stock 55000 Nov. 1 Issued 3,900 preferred shares for $50 per share. Cash(3900*50) 195000 Preferred stock(3900*3) 11700 APIC-Preferred stock(3900*47) 183300 20 Reacquired and retired 15,000 common shares at $4 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. Treasury stock(15000*2.27) 34050 Retained earnings(Bal.fig.) 25950 Cash(15000*4) 60000 Common stock 34050 Treasury stock(15000*2.27) 34050 Dec. 14 Declared a $77,000 cash dividend to the preferred shareholders, to shareholders of record on December 31, payable on January 10. Retained Earnings 77000 Preferred Dividends payable 77000 31 Reported net income of $1,180,000 for the year. Income Summary 1180000 Retained Earnings 1180000 5597650 5597650 LEDGER ACCOUNTS Debit Credit Net Ledger balances APIC-Preferred stock(20000*47) 940000 APIC-Preferred stock(3900*47) 183300 1123300 APIC-Treasury stock 1800 APIC-Treasury stock(Bal.fig) 1800 0 Cash 18000 July 24 Cash 110000 Sept. 4 Cash (11000*5) 55000 Nov. 1 Cash (3900*50) 195000 Jan. 10 Cash(1030000*2) 2060000 Cash(15000*4) 60000 Mar. 1 Cash(20000*50) 1000000 May 1 Cash(257500*3) 772500 4114500 Common stock 2060000 Common stock 772500 Common stock 18000 Common stock 124500 Common stock 55000 Common stock 34050 2959950 Equipment 14500 14500 31 Income Summary 1180000 1180000 Preferred Dividends payable 77000 77000 Preferred stock(3900*3) 11700 Preferred stock(20000*3) 60000 71700 Dec. 14 Retained Earnings 77000 Retained Earnings 1180000 Retained earnings(Bal.fig.) 25950 1077050 Treasury stock 19800 20 Treasury stock(15000*2.27) 34050 June 1 Treasury stock(9000*2.2) 19800 Treasury stock 34050 0 5597650 5597650 5309000 5309000 No.of shares Price /share Value Av. Cost /share 1030000 2 2060000 257500 3 772500 1287500 2832500 2.2 -9000 -18000 30700 124500 11000 5 55000 1320200 2994000 2.27 Pembina Corporation Balance sheet(Partial) Liabilities Shareholders' equity Preferred stock 71700 APIC-Preferred stock 1123300 Common stock 2959950 Retained Earnings 1077050 Total Equity 5232000