Question

Choctaw Co. completed the following transactions in Year 1, the first year of operation:

1. Issued 39,000 shares of $10 par common stock for $10 per share.

2.Issued 4,900 shares of $20 stated value preferred stock for $20 per share.

3. Purchased 2,900 shares of common stock as treasury stock for $12 per share.

4. Declared a $3,900 cash dividend on preferred stock.

5. Sold 2,000 shares of treasury stock for $14 per share.

6. Paid $3,900 cash for the preferred dividend declared in Event 4.

7.Earned cash revenues of $116,000 and incurred cash expenses of $60,000.

8. Appropriated $9,900 of retained earnings.

Required

a.Organize the transaction in accounts under an accounting equation.

b. Prepare the stockholders’ equity section of the balance sheet as of December 31, Year 1.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

Organize the transaction in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Account Titles for Retained Earnings, leave the cell blank.)

Answer 1

A.

Event	Assets	=	Liabilities	+	Stockholders equity
	Cash	=	Dividends payable	+	Preferred stock	+	Common stock	+	Paid in capital in excess of treasury stock	-	Treasury stock	+	Retained earnings	+	Appropriated retained earnings	Accounting titles Retained earnings
1.	$390,000						$390,000
2	$98,000				$98,000
3	($34,800)										$34,800
4			$3,900										($3,900)			Dividends
5	$28,000								$4,000		($24,000)
6	($3,900)		($3,900)
7	$116,000												$116,000			Revenues
7	($60,000)												($60,000)			Expenses
8													($9,900)		$9,900
Total	$533,300	=	$0	+	$98,000	+	$390,000	+	$4,000	-	$10,800	+	$42,200	+	$9,900

B.

Stockholders equity

Stockholders equity
Common stock	$39,000
Preferred stock	$98,000
Paid in capital in excess of treasury stock	$4,000
Total paid in capital		$492,000
Retained earnings
Unappropriated	$42,200
Appropriated	$9,900
Total retained earnings		$52,100
Less: Treasury stock		($10,800)
Total stockholders equity		$533,300