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At the beginning of 20X1, the accounting records of Friends Corp. reported the following:   Preferred shares,...

At the beginning of 20X1, the accounting records of Friends Corp. reported the following:

  Preferred shares, 6,800 shares outstanding, no-par $ 226,440
  Common shares, 181,000 shares outstanding, no-par 530,330
  Contributed capital on common share retirement 110,900
  Retained earnings 554,500


During the year, the company acquired and retired shares, while other shares were issued:

15 March 24,800 common shares bought and retired at $5 per share
16 March 4,000 preferred shares bought and retired at $36.20 per share
20 May 8,800 common shares bought and retired at $1 per share
25 May 1,500 preferred shares bought and retired at $21.70 per share
30 May 10,700 common shares issued at $13.70 per share
15 Nov. 4,900 common shares bought and retired at $28 per share


2. Calculate the closing balance in each account in shareholders’ equity. (Round intermediate calculations to 2 decimal places. Round your final answers to the nearest whole dollar.)

Preferred shares
Common shares
Contributed capital on share retirement:
Common
Preferred
Retained earnings

Solutions

Expert Solution

Par value for Common stock = 530330/181000 = $2.93
Par value for Preferred stock = 226440/6800 = $33.3
Some time, Paid In capital excess of par value or additional paid in capital words used instead of Contributed Capital.
Company name
Journal entries
Date General journal Debit Credit
15-Mar Contributed Capital on Common share retirement (24800*(5-2.93)) 51336
Common Stock (24800*2.93) 72664
Cash (24800*4) 124000
(To record 24800 common shares bought and retired at $ 5 per share.)
16-Mar Retained earnings (4000*((36.2-33.3) 11600
Preferred Stock (4000*33.3) 133200
Cash (4000*36.2) 144800
(To record 4000 Preferred shares bought and retired at $ 36.2 per share.)
20-May Common Stock (8800*2.93) 25784
Contributed Capital on Common share retirement (8800*(2.93-1)) 16984
Cash (8800*1) 8800
(To record 8800 common shares bought and retired at $ 1 per share.)
25-May Preferred Stock (1500*33.3) 49950
Contributed Capital on Preferred share retirement (1500*(33.3-21.7)) 17400
Cash (1500*21.7) 32550
(To record 1500 Preferred shares bought and retired at $ 21.7 per share.)
30-May Cash (10700*13.7) 146590
Contributed Capital on Common share retirement (10700*(13.7-2.93)) 115239
Common Stock (10700*2.93) 31351
(To record 10700 common shares issued at $ 13.7 per share.)
15-Nov Contributed Capital on Common share retirement (4900*(28-2.93)) 122843
Common Stock (4900*2.93) 14357
Cash (4900*28) 137200
(To record 4900 common shares bought and retired at $ 28 per share.)
Stock holder's equity
Date Common stock Preferred stock Contributed Capital on Common share retirement Contributed Capital on Preferred share retirement Retained earnings Total
Beg 530330 226440 110900 554500 1,422,170
15-Mar -72664 -51336 -124000
16-Mar -133200 -11600 -144800
20-May -25784 16984 -8800
25-May -49950 17400 -32550
30-May 31351 115239 146590
15-Nov -14357 -122843 -137200
Total 448876 43290 68944 17400 542900 1121410
Stock holder's equity
Preferred stock 43290
Common stock 448876
Contributed Capital on share retirement
Common 68944
Preferred 17400
Retained earnings 542900
Total Stock holder's equity 1121410

ekkarill92 answered 8 months ago
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