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The stockholders’ equity accounts of Marigold Corp. on January 1, 2017, were as follows. Preferred Stock...

The stockholders’ equity accounts of Marigold Corp. on January 1, 2017, were as follows.

Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $300,000
Common Stock ($4 stated value, 300,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par Value—Preferred Stock 15,000
Paid-in Capital in Excess of Stated Value—Common Stock 480,000
Retained Earnings 701,000
Treasury Stock (5,000 common shares) 40,000


During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb. 1 Issued 5,000 shares of common stock for $35,000.
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $8 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.85 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017.
Dec. 31 Determined that net income for the year was $284,000. Paid the dividend declared on December 1.

a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.

b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts.

Solutions

Expert Solution

a)

Date Account title and explanation Debit Credit
Feb. 1 Cash           35,000
         Common stock (5,000*$4)           20,000
           Paid in capital in excess of stated value-common stock           15,000
Mar. 20 Treasury stock (1,000*$8)             8,000
           Cash             8,000
Oct. 1 Cash dividend ($300,000*8%)           24,000
           Dividend payable           24,000
Nov. 1 Dividend payable           24,000
           Cash           24,000
Dec. 1 Cash dividend (249,000*$0.85)        211,650
           Dividend payable        211,650
Dec. 31 Income summary        284,000
          Retained earnings        284,000
(To close net income)
Dec. 31 Retained earnings (24,000+211,650)        235,650
           Cash dividends        235,650
(To close cash dividends)
Dec. 31 Dividends payable        211,650
            Cash        211,650
(To record payment of cash div. payable)

Note for Nov.1 :

No. of common shares outstanding = 250,000-5,000+5,000-1,000=249,000

b)

ekkarill92 answered 4 months ago
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