Question

A&K Corporation was established in 2016. A&K has authorized 50,000 shares of common stock, par value $1 per share, and 10,000 authorized shares of 9% preferred stock, par value $20 per share. Net Income for 2016 was $245,000. The following transactions took place during 2016: January 1 Issued 40,000 shares of common stock for cash at $30 per share. February 1 Issued 7,000 shares of preferred stock for cash of $60 per share. June 1 Repurchased 8,000 shares of L&D common stock at $25 per share. August 1 Reissued 1,000 shares of the treasury stock at $26 per share. December 1 Declared cash dividends on Common Stock only totaling $65,000 to be paid on January 15, 2017 to owners on record as of December 31, 2016. Required: Please show calculations a)Prepare journal entries for each of the above transactions. b) Calculate Ending Retained Earnings c.)Prepare the Stockholders' Equity section of the Balance Sheet in good format.

Answer 1

1-
Journal entries
date	explanantion	debit	credit
1-Jan	cash	1200000
	common stock		40000
	additional paid in capital -common stock		1160000
1-Feb	cash	4200000
	preferred stock		140000
	additional paid in capital - preferred stock		4060000
1-Jun	treasury stock	200000
	cash		200000
1-Dec	dividend payable	65000
	cash		65000
2-
Ending retained earning
net income		245000
less dividend		65000
Year end balance in retained earning		180000
3-
Statement of shareholders equity
common stock		40000
preferred stock		140000
additional paid in capital -common stock		1160000
additional paid in capital - preferred stock		4060000
retained earning		180000
treasury stock		-200000
balance in shareholders equity		5380000