Question

The stockholders’ equity accounts of Tamarisk, Inc. on January 1, 2019, were as follows.

Preferred Stock (8%, $52 par, cumulative, 10,000 shares authorized)		$  390,000
Common Stock ($1 stated value, 2,000,000 shares authorized)		1,300,000
Paid-in Capital in Excess of Par—Preferred Stock		105,000
Paid-in Capital in Excess of Stated Value—Common Stock		1,500,000
Retained Earnings		1,800,000
Treasury Stock (11,000 common shares)		44,000

During 2019, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb.	1		Issued 24,000 shares of common stock for $124,000.
Apr.	14		Sold 5,500 shares of treasury stock—common for $33,400.
Sept.	3		Issued 4,900 shares of common stock for a patent valued at $34,000.
Nov.	10		Purchased 1,100 shares of common stock for the treasury at a cost of $6,100.
Dec.	31		Determined that net income for the year was $435,000.

No dividends were declared during the year.

1. Journalize the transactions and the closing entry for net income

2. Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts
3.  Prepare a stockholders’ equity section at December 31, 2019, including the disclosure of the preferred dividends in arrears

Account titles:

Accounts Payable
Accounts Receivable
Accumulated Depreciation
Accumulated Depreciation-Buildings
Accumulated Depreciation-Equipment
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Loss
Allowance for Doubtful Accounts
Bad Debt Expense
Buildings
Cash
Cash Dividends
Common Dividends Payable
Common Stock
Common Stock Dividends Distributable
Cost of Goods Sold
Depreciation Expense
Dividends
Dividends Payable
Equipment
Gain on Sale of Stock
Income Summary
Income Tax Expense
Income Tax Payable
Insurance Expense
Interest Expense
Interest Payable
Inventory
Land
Loss on Disposal of Plant Assets
No Entry
Notes Payable
Operating Expenses
Organization Expense
Other Operating Expenses
Paid-in Capital from Treasury Stock
Paid-in Capital in Excess of Par-Common Stock
Paid-in Capital in Excess of Par-Preferred Stock
Paid-in Capital in Excess of Stated Value-Common Stock
Patents
Preferred Dividends Payable
Preferred Stock
Prepaid Expenses
Prepaid Insurance
Professional Fees
Retained Earnings
Salaries and Wages Expense
Salaries and Wages Payable
Sales Revenue
Service Revenue
Stock Dividends
Supplies
Supplies Expense
Treasury Stock
Unearned Service Revenue
Utilities Expense

Answer 1

Tamarisk Inc.
Date	Accounts Title and Explanations	Debit	Credit
1-Feb	Cash	$124,000.00
	Common stock (24000*$1)		$24,000.00
	Paid in capital in excess of stated value -common stock		$100,000.00
	Record Issuance of Common stock
14-Apr	Cash	$33,400.00
	Treasury Stock (5500X4)		$22,000.00
	Paid in capital in excess of par - Treasury stock		$11,400.00
	Record sales of sTreasury of Stock
3-Sep	Patent	$34,000.00
	Common stock (4900 shares*$1)		$4,900.00
	Paid in capital in excess of stated value -common stock (BF)		$29,100.00
	Record Issuance of Common stock in lieu of Patent
10-Nov	Treasury Stock	$6,100.00
	Cash		$6,100.00
	Record Purchase of Common stock

Common stock
		Beg Bal	$1,300,000.00
		1-Feb	$24,000.00
		3-Sep	$4,900.00
		End Bal	$1,328,900.00
Paid in capital in excess of par-Preferred stock
		Beg	$105,000.00
		End Bal	$105,000.00
Paid in capital in excess of stated value-Common stock
		Beg Bal	$1,500,000.00
		1-Feb	$100,000.00
		3-Sep	$29,100.00
			$1,629,100.00
Preferred Stock
		Beg Bal	$390,000.00
		End Bal	$390,000.00
Treasury Stock
Beg Bal	44000	14-Apr	$22,000.00
10-Nov	6100
		End Bal	$28,100.00
Paid in capital in excess of par-Treasury Stock stock
		Beg
		14-Apr	$11,400.00
		End Bal	$11,400.00

Stockholder Equity Section
Paid in capital
Capital stock
Preferred stock		$390,000.00
Common stock (1300000+24000+4900)		$1,328,900.00
Total capital stock		$1,718,900.00
Additional paid in capital:
Paid in capital in excess of par value-Preferred shares	$105,000.00
Paid in capital in excess of stated-Common shares (1500000+100000+29100)	$1,629,100.00
Paid in capital in excess of par value-Treasury Stock	11400
Total additional paid in capital		$1,745,500.00
Total paid in capital		$3,464,400.00
Retained Earning (1800000+435000)		$2,235,000.00
Less: Treasury Stock (22000+6100)		$28,100.00
Total Stockhoder Equity		$5,671,300.00