Question

 McNichols Corp. reports the following transactions relating to its stock accounts. Jan. 15 Issued 25,000 shares of $5 par value common stock at $17 cash per share. Jan. 20 Issued 6,000 shares of $50 par value, 8% preferred stock at $78 cash per share. Mar. 31 Purchased 3,000 shares of its own common stock at $20 cash per share. June 25 Sold 2,000 shares of the treasury stock at $26 cash per share. July 15 Sold the remaining 1,000 shares of treasury stock at $19 cash per share. a. Using the financial statement effects template, illustrate the effects of these transactions. b. Prepare the journal entries for these transactions. c. Post the journal entries from b to the related T-accounts

Answer 1

a. Using the financial statement effects template, illustrate the effects of these transactions.
Balance Sheet														Income Statement
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital	-	Contra-Equity				Revenues	-	Expenses	=	Net Income
Jan-15	4,25,000	+	0	=	0	+	1,25,000	+	3,00,000	-	0				0	-	0	=	0
	4,25,000		0	=	0		1,25,000		3,00,000		0				0	-	0	=	0
Jan-20	4,68,000	+	0	=	0	+	3,00,000	+	1,68,000	-	0				0	-	0	=	0
	8,93,000		0		0		4,25,000		4,68,000		0				0		0		0
Mar-31	-60,000	+	0	=	0	+	-	+	-	-	-60,000				0	-	0	=	0
	8,33,000		0		0		4,25,000		4,68,000		-60,000				0		0		0
Jun-25	52,000	+	0	=	0	+	0	+	12,000	-	40,000				0	-	0	=	0
	8,85,000		0		0		4,25,000		4,80,000		-20,000				0		0		0
Jul-15	19,000	+	0	=	0	+	0	+	-1,000	-	20,000				0	-	0	=	0
	9,04,000		0		0		4,25,000		4,79,000		-				0		0		0

b)General Journal
Date	Description	Debit	Credit
Jan-15	Cash	4,25,000
	Common Stock		1,25,000
	Additional paid-in capital		3,00,000
Jan-20	Cash	4,68,000
	Preferred stock		3,00,000
	Additional paid-in capital		1,68,000
Mar-31	Treasury stock	60,000
	Cash		60,000
Jun-25	Cash	52,000
	Additional paid-in capital		12,000
	Treasury stock		40,000
Jul-15	Cash	19,000
	Additional paid-in capital	1,000
	Treasury stock		20,000

c). Post the journal entries from a to the related T-accounts.
				Cash (A)
Jan-15	4,25,000	-
Jan-20	4,68,000	-
Mar-31	-	60,000
Jun-25	52,000	-
Jul-15	19,000	-
Preferred Stock (SE)
Jan-15	-	-
Jan-20	-	3,00,000
Mar-31	-	-
Jun-25	-	-
Jul-15	-	-
Common Stock (SE)
Jan-15	-	1,25,000
Jan-20	-	-
Mar-31	-	-
Jun-25	-	-
Jul-15	-	-
Treasury Stock (XSE)
Jan-15	-	-
Jan-20	-	-
Mar-31	60,000	-
Jun-25	-	40,000
Jul-15	-	20,000
Additional Paid-in Capital (SE)
Jan-15	-	3,00,000
Jan-20	-	1,68,000
Mar-31	-	-
Jun-25	-	12,000
Jul-15	1,000	-