Question

In: Accounting

At the beginning of January 201X, the stockholders’ equity of Mountain View Corporation consisted of the...

At the beginning of January 201X, the stockholders’ equity of Mountain View Corporation consisted of the following:

Paid-In Capital:

Common Stock, $30 par value, authorized 60,000 shares,
15,000 shares issued and outstanding

$450,000

Paid-In Capital in Excess of Par Value-Common

80,000

Paid-In Capital by Common

Stockholders

$530,000

Retained Earnings

170,000

Total Stockholders’ Equity

$700,000

Figure 8

Tasks:

a. Record the transactions in general journal form.

b. Prepare the stockholders’ equity section at year-end using the Blueprint as a guide.

c. Prepare a statement of retained earnings at December 31, 201X.

Accounts are provided in the working papers that accompany this text. Be sure to put in the beginning balances.

201X

June           5     Mountain View Corporation purchased 1,000 shares of treasury stock at $34.

June         25     The board of directors voted a $0.20 per share cash dividend payable on July 20 to stockholders of record on July 4.

July          20     Cash dividend declared on June 25 is paid.

Sept.       10     Sold 300 shares of the treasury stock at $43 per share.

Sept.       30     Sold 700 shares of the treasury stock at $33 per share.

Oct.         15     The board of directors declared a 10% stock dividend distributable on January 2 to stockholders of record on November 2. The market value of the stock is currently $50 per share.

Dec.         31     Closed the net income of $70,000 in the Income Summary account to Retained Earnings.

Solutions

Expert Solution

Answer a.
Journal Entry
Date Particulars Dr. Amt. Cr. Amt.
201X
5-Jun Treasury Shares    34,000.00 1,000 Shares X $34
Cash    34,000.00 1,000 Shares X $34
(Record the purchase of treasury shares)
25-Jun Retained Earnings      2,800.00 14,000 Shares X $0.20
Cash Dividend      2,800.00 14,000 Shares X $0.20
(Record the cash dividend declared)
20-Jul Cash Dividend      2,800.00
Cash      2,800.00
(record the dividend paid)
10-Sep Cash    12,900.00 300 Shares X $43
Treasury Shares    10,200.00 300 Shares X $34
Paid in Capital in Excess of Par Value - Treasury      2,700.00 300 Shares X ($43 - $34)
(Record the sales of treasury shares)
30-Sep Cash    23,100.00 700 Shares X $33
Paid in Capital in Excess of Par Value - Treasury          700.00 700 Shares X ($34 - $33)
Treasury Shares    23,800.00 700 Shares X $34
(Record the sale of treasury shares)
15-Oct Retained Earnings    75,000.00 15,000 Shares X 10% X $50
Stock Dividend Distributable    45,000.00 15,000 Shares X 10% X $30
Paid in Capital in Excess of Par Value - Common    30,000.00 15,000 Shares X 10% X $20
(Record the stock dividend declared)
31-Dec Income Summary    70,000.00
Retained Earnings    70,000.00
(record the net income earned)
Answer b.
Mountain View Corporation
Balance Sheet
As on Dec 31, 201X
Stockholders' Equity
Paid in Capital
Common Stock - $30 Par Value, Authorized 60,000 Shares, 15,000 shares issued & outstanding    450,000.00
Paid in Capital in Excess of Par Value - Common    110,000.00
Paid in Capital in Excess of Par Value - Treasury        2,000.00
Total Paid in Capital     562,000.00
Retained Earnings     162,200.00
Total Stockholders' Equity     724,200.00
Answer c.
Mountain View Corporation
Statement of Retained Earnings
For the Year Ended Dec 31, 201X
Beginning Balance - Jan 1, 201X    170,000.00
Add: Net Income      70,000.00
Sub-total    240,000.00
Cash Dividend      (2,800.00)
Stock Dividend Distributable    (75,000.00)
Ending Balance - Dec 31, 201X    162,200.00

ekkarill92 answered 2 years ago
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