Question

On January 1, 2020, Bronson Corporation had the following information available
regarding its stockholders' equity:

4%, $50 par, cumulative Preferred Stock, 300,000 shares authorized 9,000,000 $
Paid-in Capital in Excess of Par - Preferred Stock 1,440,000
Common Stock, $3 par, 1,000,000 shares authorized, 530,000 shares issued, ?
510,000 shares outstanding
Paid-in Capital in Excess of Par - Common Stock 4,770,000
Paid-in Capital from Treasury Stock Transactions 55,000
Treasury Stock (held at cost) 180,000
Retained Earnings 17,210,000

The following transactions affecting stockholders' equity took place during 2020:
2/4/2020 Issued 170,000 shares of common stock for $13/share.
3/17/2020 Issued 40,000 shares of preferred stock for $54/share.
4/24/2020 Declared a cash dividend to shareholders of record on May 15, 2020 payable on
May 31, 2020. The preferred shareholders are to receive their contractual preference
(no dividends are in arrears) and the common shareholders are to receive $0.30/share.
Use separate payable accounts for preferred and common dividends.
5/31/2020 Paid the cash dividend.
7/3/2020 Sold all of the treasury stock for $7/share.
8/15/2020 Declared a 3:1 stock split on the common stock. Authorized shares were adjusted
to accommodate the split.
9/10/2020 Declared a 10% stock dividend on the common stock for shareholders of record
September 30, 2020, to be issued on October 15, 2020. The market price of the
common stock on September 10, 2020 was $6/share.
10/15/2020 Issued the shares in conjunction with the stock dividend.
11/18/2020 Repurchased 30,000 shares of its own common stock for $5/share.
12/14/2020 Closed out any and all dividend accounts.
12/31/2020 Closed $500,000 of revenues and 265,000 of expenses for fiscal 2020.
Instructions

YOU MUST COMPLETE THE PROJECT BY COMPUTER AND IT MUST BE FORMATTED TO PRINT CORRECTLY!
1) Open T-accounts for the stockholders' equity accounts that contain balances on January 1, 2020 and
insert the appropriate balance labeling it 1/1/20.
2) Record formal journal entries for the 2020 transactions. Journal descriptions are not required.
3) Post the 2020 journal entries to the stockholders' equity T-accounts (or create new stockholders'
equity T-accounts if necessary) labeling each entry with the appropriate date.
4) Prepare the stockholders' equity section of the balance sheet at December 31, 2020.

Answer 1

T-ACCOUNTS AS ON JANUARY 1, 2020:

4% CUMULATIVE PREFERRED STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					$        15,000,000
ADDITIONAL PAID IN CAPITAL-PREFERRED STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					$        1,440,000
COMMON STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					$        1,530,000
ADDITIONAL PAID IN CAPITAL-COMMON STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					$        4,770,000
ADDITIONAL PAID IN CAPITAL-TREASURY STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance				$        55,000
TREASURY STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance				$      180,000
REATINED EARNINGS
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					$      17,210,000

JOURNAL ENTRIES:

Date	Account Tiltles and Explanation	Debit	Credit
04-Feb-20	Cash	$              2,210,000
	Common Stock ($3 X 170,000)		$              510,000
	Additional Paid in Capital Common Stock ($10 X 170,000)		$          1,700,000
17-Mar-20	Cash	$              2,160,000
	4% Cumulative Preferred Stock ($50 X 40,000)		$          2,000,000
	Additional Paid in Capital-Preferred Stock ($4 X 40,000)		$              160,000
15-May-20	Dividend Expense	$                  884,000
	Dividend Payable on Preferred Stock (4% X 340,000 Shares X $50)		$              680,000
	Dividend Payable on Common Stock ($0.30/Per Share X 680,000 Shares)		$              204,000
31-May-20	Dividend Payable on Preferred Stock	$                  680,000
	Dividend Payable on Common Stock	$                  204,000
	Cash		$              884,000
15-Aug-20	Common Stock ($3 Par Value) - 680,000 Shares	$              2,040,000
	Common Stock ($1 Par Value) - 680,000 Shares X 3		$          2,040,000
10-Sep-20	Dividend Expense	$                  204,000
	Dividend Payable on Common Stock (10% X 2,040,000 X $1)		$              204,000
15-Oct-20	Dividend Payable on Common Stock	$                  204,000
	Common Stock ($204,000 / $6 X $1)		$                34,000
	Additional Paid in Capital-Common Stock($204,000 /$6 X $5)		$              170,000
18-Nov-20	Common Stock ($1 X 30,000)	$                    30,000
	Additional Paid in Capital Preferred Stock ($4 X 30,000)	$                  120,000
	Cash		$              150,000
14-Dec-20	Dividend Expense	$              1,088,000
	Retained Earnings		$          1,088,000
31-Dec	Revenues	$                  500,000
	Expenses		$              265,000
	Income Summary		$              235,000

T-ACCOUNTS FOR THE YEAR ENDED 31 DFECEMBER,2020:

COMMON STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					1,530,000
Feb	4	Cash			510,000		2,040,000
Aug	15	New Common Stock		2,040,000		-	-

NEW COMMON STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Aug	15	Balance			2,040,000		2,040,000
Oct	15	Dividend Payable on Common Stock			34,000		2,074,000
Nov	18	Cash		30,000			2,044,000

ADDITIONAL PAID IN CAPITAL-COMMON STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					4,770,000
Feb	4	Cash			1,700,000		6,470,000
Oct	15	Dividend Payable on Common Stock			170,000		6,640,000
Nov	18	Cash		120,000			6,520,000

4% CUMULATIVE PREFERRED STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					15,000,000
Mar	17	Cash			2,000,000		17,000,000

ADDITIONAL PAID IN CAPITAL-PREFERRED STOCK
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					1,440,000
Mar	17	Cash			160,000		1,600,000

RETAINED EARNINGS
DATE	DESCRIPTION	POST REF.	DEBIT	CREDIT	BALANCE
DEBIT	CREDIT
2020
Jan	1	Balance					17,210,000
Dec	31	Dividend Expense		1,088,000			16,122,000