Question

The stockholders’ equity accounts of Flint Corporation on January 1, 2017, were as follows.

Preferred Stock (8%, $100 par noncumulative, 4,950 shares authorized)		$297,000
Common Stock ($4 stated value, 321,000 shares authorized)		1,070,000
Paid-in Capital in Excess of Par Value—Preferred Stock		14,850
Paid-in Capital in Excess of Stated Value—Common Stock		513,600
Retained Earnings		686,500
Treasury Stock (4,950 common shares)		39,600

.

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

Feb.	1		Issued 4,950 shares of common stock for $29,700.
Mar.	20		Purchased 1,400 additional shares of common treasury stock at $7 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 $0.60 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 $276,100. Paid the dividend declared on December 1.

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

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

Prepare the stockholders’ equity section of the balance sheet at December 31, 2017

Answer 1

Answer:

Date	Particulars	Debit ($)	Credit ($)
1 Feb	Cash	29700
	Common stock (4950*4)		19800
	Paid in capital in excess of stated value - Common stock		9900
20 Mar	Treasury stock (1400*7)	9800
	Cash		9800
1 Oct	Retained earnings	23760
	Cash Dividend payable (297000*8%)		23760
1 Nov	Cash Dividend payable	23760
	Cash		23760
1 Dec	Retained earnings	191760
	Cash Dividend payable (321000-4950+4950-1400)*0.60		191760
31 Dec	Income summary	276100
	Retained earnings		276100

Preferred Stock
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			297000

Common Stock
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			1070000
Feb 1	Cash		19800	1089800

Paid in capital in excess of stated value - Preferred Stock
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			14850

Paid in capital in excess of stated value - Common Stock
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			513600
Feb 1	Cash		9900	523500

Retained earnings
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			686500
Oct 30	Dividend on PSC	23760		662740
Dec 1	Dividend on Common	191760		470980

Treasury Stock
Date	Particulars	Debit ($)	Credit ($)	Balance ($)
Jan 1	Balance			39600
Mar 20	Cash	9800		29800

Stockholders equity section
	Jan 1 2017	Dec 31 2017
Preferred Stock	297000	297000
Common stock	1070000	1089800
Paid in capital in excess of par value - Preferred stock	14850	14850
Paid in capital in excess of par value - Common stock	513600	523500
Retained earnings	686500	470980
Treasury stock	-39600	-29800
Total Stockholder equity	2542350	2366330