Question

Prepare journal entries for these transactions for Year 1 and Year 2 and post them to T-accounts. lines 1 through 19

[The following information applies to the questions displayed below.]

Sun Corporation received a charter that authorized the issuance of 119,000 shares of $6 par common stock and 18,000 shares of $75 par, 6 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation:

Year 1

1.Jan. 5 Sold 17,850 shares of the $6 par common stock for $8 per share.

2. Jan 12 Sold 1,800 shares of the 6 percent preferred stock for $85 per share.

3. Apr. 5 Sold 23,800 shares of the $6 par common stock for $10 per share.

4. & 5. (record cash revenue earned & record payment for operating expenses) Dec. 31 During the year, earned $301,400 in cash revenue and paid $241,600 for cash operating expenses.

6. Dec 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2.

7, 8 & 9. (Record closing entry for service revenue, operating expenses & dividends) Dec 31 Closed the revenue, expense, and dividend accounts to the retained earnings account.

Year 2

10. Feb. 15 Paid the cash dividend declared on December 31, Year 1.

11. Mar. 3 Sold 2,700 shares of the $75 par preferred stock for $95 per share.

12. May 5 Purchased 500 shares of the common stock as treasury stock at $12 per share.

13 & 14. (record cash revenue earned & record payment for operating expenses)Dec. 31 During the year, earned $254,900 in cash revenues and paid $179,600 for cash operating expenses.

15. Dec 31 Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock.

16, 17 & 18 (Record closing entry for revenue accounts, operating expenses & dividends) Dec 31 Closed revenue, expense, and dividend accounts to the retained earnings account.

19. Post all transactions to T-accounts

Answer 1

Date	Account Title	Debit	Credit
Year 1
1-Jan	Cash(17850*8)	142800
	Common stock(17850*6)		107100
	APIC-Common stock(17850*2)		35700
12-Jan	Cash(1800*85)	153000
	6% Cumulative Preferred stock(1800*75)		135000
	APIC-Preferred stock(1800*10)		18000
Apr. 5	Cash(23800*10)	238000
	Common stock(23800*6)		142800
	APIC-Common stock(23800*4)		95200
31-Dec	Cash	301400
	Service Revenues		301400
	Operating Expenses	241600
	Cash		241600
	Preferred dividends	8100
	Preferred dividends payable		8100
	(6%*135000)
7,8& 9
	Service Revenues	301400
	Retained earnings		51700
	Operating Expenses		241600
	Preferred dividends		8100
Year 2
15-Feb	Preferred dividends payable	8100
	Cash		8100
11-Mar	Cash(2700*95)	256500
	6% Cumulative Preferred stock(2700*75)		202500
	APIC-Preferred stock(2700*20)		54000
5-May	Treasury stock	6000
	Cash(500*12)		6000
31-Dec	Cash	254900
	Service Revenues		254900
	Operating Expenses	179600
	Cash		179600
	Preferred dividends(135000*6%)	8100
	Preferred dividends payable		8100
	Common stock dividends	20575
	Common stock dividends payable		20575
	(17850+23800-500)*0.50
	Service Revenues	254900
	Retained earnings		46625
	Operating Expenses		179600
	Preferred dividends		8100
	Common stock dividends		20575
		2374975	2374975

	LEDGER ACCOUNTS			Net led. Bal.
Date	Account Title	Debit	Credit	Debit	Credit
12-Jan	6% Cumulative Preferred stock(1800*75)		135000
11-Mar	6% Cumulative Preferred stock(2700*75)		202500		337500
1-Jan	APIC-Common stock(17850*2)		35700
Apr. 5	APIC-Common stock(23800*4)		95200		130900
12-Jan	APIC-Preferred stock(1800*10)		18000
11-Mar	APIC-Preferred stock(2700*20)		54000		72000
31-Dec	Cash	301400
31-Dec	Cash		241600
15-Feb	Cash		8100
31-Dec	Cash	254900
31-Dec	Cash		179600
1-Jan	Cash(17850*8)	142800
12-Jan	Cash(1800*85)	153000
Apr. 5	Cash(23800*10)	238000
11-Mar	Cash(2700*95)	256500
5-May	Cash(500*12)		6000	911300
31-Dec	Common stock dividends	20575
31-Dec	Common stock dividends		20575	0
31-Dec	Common stock dividends payable		20575		20575
1-Jan	Common stock(17850*6)		107100
Apr. 5	Common stock(23800*6)		142800		249900
31-Dec	Operating Expenses	241600
7,8& 9	Operating Expenses		241600
31-Dec	Operating Expenses	179600
31-Dec	Operating Expenses		179600	0
31-Dec	Preferred dividends	8100
7,8& 9	Preferred dividends		8100
31-Dec	Preferred dividends		8100
31-Dec	Preferred dividends(135000*6%)	8100		0
31-Dec	Preferred dividends payable		8100
15-Feb	Preferred dividends payable	8100
31-Dec	Preferred dividends payable		8100		8100
7,8& 9	Retained earnings		51700
31-Dec	Retained earnings		46625		98325
31-Dec	Service Revenues		301400
7,8& 9	Service Revenues	301400
31-Dec	Service Revenues		254900
31-Dec	Service Revenues	254900			0
5-May	Treasury stock	6000		6000
		2374975	2374975	917300	917300

List of Balances	Debit	Credit
Cash	911300
6% Cumulative Preferred stock		337500
APIC-Preferred stock		72000
Common stock		249900
APIC-Common stock		130900
Treasury stock	6000
Preferred dividends payable		8100
Common stock dividends payable		20575
Retained earnings		98325
Total	917300	917300