Question

B&J Corporation was established in 2016. B&J has authorized 50,000 shares of common stock, par value $2 per share, and 10,000 authorized shares of 6% preferred stock, par value $10 per share. Net Income for 2016 was $210,000. The following transactions took place during 2016:

January 1	Issued 30,000 shares of common stock for cash at $20 per share.
February 1	Issued 8,000 shares of preferred stock for cash of $50 per share.
June 1	Repurchased 4,000 shares of L&D common stock at $18 per share.
August 1	Reissued 2,000 shares of the treasury stock at $19 per share.
December 1	Declared cash dividends on Common Stock only totaling $70,000 to be paid on January 15, 2017 to owners on record as of December 31, 2016.

Required: Please show calculations
a)Prepare journal entries for each of the above transactions.
b) Calculate Ending Retained Earnings
c.)Prepare the Stockholders' Equity section of the Balance Sheet in good format.

Answer 1

a)

Date	General Journal	Debit	Credit
Jan. 1	Cash (30000 x $20)	600000
	Common stock (30000 x $2)		60000
	Paid-in capital in excess of par-common		540000
	(To record the issuance of common stock)
Feb. 1	Cash (8000 x $50)	400000
	Preferred stock (8000 x $10)		80000
	Paid-in capital in excess of par-preferred		320000
	(To record the issuance of common stock)
Jun. 1	Treasury stock (4000 x $18)	72000
	Cash		72000
	(To record shares repurchased)
Aug. 1	Cash (2000 x $19)	38000
	Treasury stock (2000 x $18)		36000
	Paid-in capital from treasury stock		2000
	(To record reissue of treasury stock)
Dec. 1	Cash dividends	70000
	Dividends payable		70000
	(To record cash dividends declared)

b) Ending retained earnings = Net income - Dividends = $210000 - $70000 = $140000

c)

B&J Corporation
Balance Sheet (Partial)
December 31, 2016
Stockholders' Equity:
Paid-in Capital
Capital stock
Preferred stock	80000
Common stock	60000
Total capital stock		140000
Additional Paid-in Capital
Paid-in capital in excess of par-preferred	320000
Paid-in capital in excess of par-common	540000
Paid-in capital from treasury stock	2000
Total additional paid-in capital		862000
Total paid-in capital		1002000
Retained earnings		140000
Less: Treasury stock		-36000
Total stockholders' equity $		1106000