Question

The stockholders’ equity accounts of Castle Corporation on January 1, 2017, were as follows. Preferred Stock (8%, $50 par, cumulative, 10,500 shares authorized) $ 375,000 Common Stock ($1 stated value, 1,900,000 shares authorized) 1,250,000 Paid-in Capital in Excess of Par—Preferred Stock 140,000 Paid-in Capital in Excess of Stated Value—Common Stock 1,450,000 Retained Earnings 1,850,000 Treasury Stock (11,000 common shares) 55,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity. Feb. 1 Issued 24,500 shares of common stock for $125,000. Apr. 14 Sold 5,600 shares of treasury stock—common for $32,200. Sept. 3 Issued 4,700 shares of common stock for a patent valued at $35,000. Nov. 10 Purchased 1,100 shares of common stock for the treasury at a cost of $6,100. Dec. 31 Determined that net income for the year was $420,000. No dividends were declared during the year. Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. Preferred Stock Date Explanation Ref. Debit Credit Balance Balance √ Common Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5 Paid-in Capital in Excess of Par—Preferred Stock Date Explanation Ref. Debit Credit Balance Balance √ Paid-in Capital in Excess of Stated Value—Common Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5 Paid-in Capital from Treasury Stock Date Explanation Ref. Debit Credit Balance J5 Retained Earnings Date Explanation Ref. Debit Credit Balance Balance √ J5 Treasury Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5 Prepare a stockholders’ equity section at December 31, 2017, including the disclosure of the preferred dividends in arrears. (Enter the account name only and do not provide the descriptive information provided in the question.)

Answer 1

		Castle Corporation
		General,Journal
	Date	Account Head & Explaination	Debit	Credit
	01-02-2017	Cash	$    1,25,000.00
		To Common Stock(24500*$1)		$     24,500.00
		To Paid in Capital excess of Par		$ 1,00,500.00
	14-04-2017	Cash	$       32,200.00
		To treasury Stock(5600/11000)*$55000		$     28,000.00
		To Paid in Capital-Excess of Par		$       4,200.00
	03-09-2017	Patent	$       35,000.00
		To Common Stock		$       4,700.00
		To Paid in Capital excess of par		$     30,300.00
	10-11-2017	Treasury Stock	$          6,100.00
		To Cash		$       6,100.00
	31-12-2017	Income Summary	$    4,20,000.00
		To Retained Earnings		$ 4,20,000.00
		T-Accounts
		Common Stock
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$ 12,50,000.00
	01-Feb	Cash		$     24,500.00	$ 12,74,500.00
	03-Sep	Patent		$       4,700.00	$ 12,79,200.00
		Preferred Stock
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$    3,75,000.00
		Treasury Stock
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$       55,000.00
	14-Apr	Cash		$     28,000.00	$       83,000.00
	10-Nov	Cash	$          6,100.00		$       76,900.00
		Treasury Stock with debit balance
		Paid in Capital Excess of Par-Common Stock
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$ 14,50,000.00
	01-Feb	Cash		$ 1,00,500.00	$ 15,50,500.00
	03-Sep	Patent		$     30,300.00	$ 15,80,800.00
		Paid in Cpapital excess of par-Preferred Stock
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$    1,40,000.00
		Paid in Capital Excess of Par-Treasury Stock
	Date	Particular	Debit	Credit	Balance
	14-Apr	Cash		$       4,200.00	$          4,200.00
		Retained Earnings
	Date	Particular	Debit	Credit	Balance
	01-Jan	Opening Balance			$ 18,50,000.00
	31-Dec	Income Summary		$ 4,20,000.00	$ 22,70,000.00
	Shareholer's Equity
	Paid in Capital
	Common Stock,no par,$1 stated value 1,900,000 shares authorized,1,250,000 shares issued,1,279,200 shares outstanding	$                                                       12,79,200.00
	8% preferred stock, $50 par value ,10500 shares authorized,7500 shares issued(7500*$50)	$                                                          3,75,000.00
	Total Capital Stock		$ 16,54,200.00
	Additional Paid in Capital in excess of Par
	Common Stock	$                                                       15,80,800.00
	Preferred stock	$                                                          1,40,000.00
	Treasury Stock	$                                                                4,200.00
	Total Additional Paid in Capital		$ 17,25,000.00
	Total Paid in Capital		$ 33,79,200.00
	Retained Earnings		$ 22,70,000.00
	Total Paid in Capital & retained Earnings		$ 56,49,200.00
	Less: Treasury Stock(11000-5600+1100 )=6500 Common Shares)		$      -76,900.00
	Total Shareholder's Equity($5649200-$76900)		$ 55,72,300.00
	Treasury Stock
	Beginning	11000
	Less: Sold	-5600
	Add: Purchased	1100
	Ending Balance	6500
	Number of Preferred stock outstanding=($375000/50)=7500
	Number of common stock outstanding=($1279200/$1)=1279200