Question

The following transactions relate to Sunlight Mountain Inc. Prepare journal entries for each transaction. Prepare the equity section of the balance sheet at each year-end, December 31. Assume 2015 was Sunlight’s first year of operations.

1. Sunlight issued 1,000 shares of $1 par value common stock for $70 per share on January 1, 2015.

DATE

ACCOUNT NAME

DEBIT

CREDIT

BALANCE SHEET

INCOME STMT

A

=

L

+

E

R

-

E

1/1/15

2. Sunlight issued 500 shares of no par value, $5, non-cumulative preferred stock for $50 per share on January 1, 2015.

DATE

ACCOUNT NAME

DEBIT

CREDIT

BALANCE SHEET

INCOME STMT

A

=

L

+

E

R

-

E

1/1/15

3. Sunlight reported net income of $2,000 during 2015 and paid no dividends. Prepare the company’s equity section of the December 31, 2015, balance sheet.

Stockholders’ Equity:

Total Stockholder's Equity

  

Answer 1

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Event	DATE	ACCOUNT NAME	DEBIT	CREDIT	BALANCE SHEET			INCOME STMT
					A	L	E	R	E
a	01-01-2015	Cash	70000		70000
		Common Stock		1000			1000
		Additiona Paid in capital, in excess of par, Common		69000			69000
b	01-01-2015	Cash	25000		25000
		Preferred Stock		2500			2500
		Additiona Paid in capital, in excess of par, Preferred		22500			22500
		Equity Section:
		Common Stock		$    1,000
		Preferred Stock		$    2,500
		Additional Paid in capital, Common		$ 69,000
		Additional Paid in capital, Preferred		$ 22,500
		Total paid in capital		$ 95,000
		Add: Net Income		$    2,000
		Total Stockholder's Equity		$ 97,000