Question

Peck Corporation is authorized to issue 20,000 shares of $50 par value, 10% preferred stock and 130,000 shares of $5 par value common stock. On January 1, 2017, the ledger contained the following stockholders’ equity balances.

Preferred Stock (12,000 shares)		$600,000
Paid-in Capital in Excess of Par—Preferred Stock		70,500
Common Stock (65,500 shares)		327,500
Paid-in Capital in Excess of Par—Common Stock		650,000
Retained Earnings		290,000

During 2017, the following transactions occurred.

Feb.	1		Issued 2,000 shares of preferred stock for land having a fair value of $121,000.
Mar.	1		Issued 1,200 shares of preferred stock for cash at $70 per share.
July	1		Issued 15,000 shares of common stock for cash at $7 per share.
Sept.	1		Issued 350 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market price for the preferred stock was $69 and the fair value for the patent was indeterminable.
Dec.	1		Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec.	31		Net income for the year was $258,000. No dividends were declared. 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. (Use J2 for the posting reference.) 3)Prepare a stockholders’ equity section at December 31, 2017.

Answer 1

Solution:-

1)

Date	Account title and description	Debit	Credit
Feb 1	Land	121,000
	Preferred Stock (2,000 * 50)		100,000
	Paid-In Capital in Excess of Par, Preferred Stock		21,000
Mar. 1	Cash (1,200 * 70)	84,000
	Preferred Stock (1,200 * 50)		60,000
	Paid-In Capital in Excess of Par, Preferred Stock		24,000
July 1	Cash (15,000 * 7)	105,000
	Common Stock (15,000 * 5)		75,000
	Paid-In Capital in Excess of Par, Common Stock		30,000
Sept. 1	Patent (350 * 69)	24,150
	Preferred Stock (350 * 50)		17,500
	Paid-In Capital in Excess of Par, Preferred Stock		6,650
Dec. 1	Cash (8,000 * 7.50)	60,000
	Common Stock (8,000 * 5)		40,000
	Paid-In Capital in Excess of Par, Common Stock		20,000
Dec. 31	Income Summary	258,000
	Retained Earnings		258,000

2)

Preferred stock
		Jan. 1	600,000
		Feb 1	100,000
		Mar. 1	60,000
		Sept. 1	17,500
		Dec. 31 Bal.	777,500

Paid-In Capital in Excess of Par, Preferred Stock
		Jan. 1	70,500
		Feb 1	21,000
		Mar. 1	24,000
		Sept. 1	6,650
		Dec. 31 Bal.	122,150

Common Stock
		Jan. 1	327,500
		July 1	75,000
		Dec. 1	40,000
		Dec. 31 Bal.	442,500

Paid-In Capital in Excess of Par, Common Stock
		Jan. 1	650,000
		July 1	30,000
		Dec. 1	20,000
		Dec. 31 Bal.	700,000

3)

Peck Corporation
Partial balance sheet
December 31, 2017
Stockholder's equity
Paid in capital
Capital stock
10% preferred stock, $50 par value, 20,000 shares authorized, 15,550 shares issued	777,500
Common stock, $5 par value, 130,000 shares authorized, 88,500 shares issued	442,500
Total capital stock		1,220,000
Additioanl paid in capital
In excess of par- preferred	122,150
In excess of par- Common	700,000
Total additional paid in capital		822,150
Total paid in capital		2,042,150
Retained earnings		548,000
Total shareholder's equity		2,590,150

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