Question

Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp.

Great Adventures has authorized $1 par value common stock. When the company began on July 1, 2021, Tony and Suzie each purchased 10,000 shares (20,000 shares total) of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during the remainder of 2022:

November	5		Issue an additional 116,000 shares of common stock for $10 per share.
November	16		Purchase 11,600 shares of its own common stock (i.e., treasury stock) for $23 per share.
November	24		Resell 5,600 shares of treasury stock at $24 per share.
December	1		Declare a cash dividend on its common stock of $13,320 ($0.10 per share) to all stockholders of record on December 15.
December	20		Pay the cash dividend declared on December 1.
December	31		Pay $840,000 for construction of new cabins and other facilities. The entire expenditure is recorded in the Buildings account.

1. Record each of these transactions.

2. Great Adventures has net income of $38,560 in 2022. Retained earnings at the beginning of 2022 was $34,250. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2022.

Answer 1

Date	Account Titles	Debit	Credit
Nov-05	Cash	$          11,60,000
	Common Stock		$                1,16,000
	Paid in capital in excess of par-common		$              10,44,000
Nov-16	Treasury Stock	$             2,66,800
	Cash		$                2,66,800
Nov-24	Cash	$             1,34,400
	Treasury Stock		$                1,28,800
	Paid in capital from Treasury Stock		$                      5,600
Dec-01	Cash Dividend / Retained Earnings	$                13,320
	Dividend Payable		$                    13,320
Dec-20	Dividend Payable	$                13,320
	Cash		$                    13,320
Dec-31	Building	$             8,40,000
	Cash		$                8,40,000

Stockholder's Equity
Common Stock	$             1,36,000
Paid in capital in excess of par-common	$          10,44,000
Paid in capital from Treasury Stock	$                  5,600
Total Paid in Capital	$          11,85,600
Retained Earnings	$                59,490
Sub total	$          12,45,090
Less Treasury Stock	$             1,38,000
Total Stockholders Equity	$          11,07,090