In: Accounting
please show all the calcualtions, thanks!
The xxx inc. had equity on December 31, 2015, as follows:
Common shares, unlimited shares authorized,
50,000 shares issued $250,000
Retained earnings 200,000
Able Corporation is authorized to issue 100,000 shares of $3 cumulative preferred shares.
The following transactions occurred during 2016:
Jan. 15 Issued 5,000 common shares in exchange for equipment valued at $ 35,000.
Feb. 15 The board of directors declared a 5% share dividend to shareholders of record on March 1, to be distributed on March 20. The shares were selling for $6 a share.
Mar. 20 Issued the share dividend.
Apr. 15 Issued 12,000 preferred shares for cash at $22 per share.
May 1 Declared total cash dividends of $62,000 toshareholders of record on May 20, payable June 1.
June 1 Paid the cash dividend.
Aug. 20 The board decided to split the common shares 4 for 1 effective September 1.
Sept. 1 Share split (4 for 1) executed.
Dec. 31 Earned a net income of $300,000 for the year. Closed the income summary account.
REQUIRED:
1) Journalize the above journal entries.
2) Prepare a statement of changes in equity for2016.
3) Prepare the balance sheet presentation of the equity as at December 31, 2016.
JOURNAL ENTRY | ||||||||||
Date | Account Title | Debit | Credit | |||||||
Jan.15 | Equipment | $35,000 | ||||||||
Common Shares | $25,000 | (5000*5) | ||||||||
Additional Paid up Capital-Common shares | $10,000 | (35000-25000) | ||||||||
(To record Issue of 5000 shares for $7 per share against equipment) | ||||||||||
Feb15 | Retained Earnings | $ 16,500 | (0.05*(50000+5000)*$6) | |||||||
Common share dividend distributable | $ 13,750 | (0.05*(50000+5000)*$5) | ||||||||
Additional paid up capital-Common shares | $ 2,750 | (16500-13750) | ||||||||
(To record 5% share dividend declared) | ||||||||||
March 20 | Common share dividend distributable | $ 13,750 | ||||||||
Common Shares | $ 13,750 | |||||||||
(To record issue of 2750 common share dividend) | 2750 | |||||||||
April 15 | Cash | $ 264,000 | (22*12000) | |||||||
Preferred shares | $ 36,000 | (3*12000) | ||||||||
Additional paid in capital-Preferred shares | $ 228,000 | |||||||||
(To record issue of 12000 preferred shares for $22 per share ) | ||||||||||
May1 | Retained Earnings | $62,000 | ||||||||
Dividend payable | $62,000 | |||||||||
(To redord declaration of cash dividend) | ||||||||||
June1 | Dividend payable | $62,000 | ||||||||
Cash | $62,000 | |||||||||
(To record payment of dividend) | ||||||||||
August 20 | On August20 a 4-for-1 stock split was declared for the common stockholders of record as of September1. | |||||||||
Sep. 1 | The stock split resulted in the number of issued and outstanding shares of common shares increasing from 57750=(55,000+2750) shares to 231000 shares." | |||||||||
Dec31 | Summary Income Account | $300,000 | ||||||||
Retained earnings | $300,000 | |||||||||
(To record closure of Summary income account) | ||||||||||
STATEMENT OF CHANGES IN EQUITY | ||||||||||
Common Shares | Additional paid in capital- common shares | Preferred shares | Additional paid in capital-preference shares | Retained Earnings | ||||||
Beginning balance | $250,000 | $0 | $0 | $0 | $200,000 | |||||
Addition during the year: | $38,750 | $12,750 | $ 36,000 | $ 228,000 | $221,500 | |||||
Ending Balance | $288,750 | $12,750 | $36,000 | $228,000 | $421,500 | |||||
BALANCE SHEET | ||||||||||
STOCKHOLDERS EQUITY | ||||||||||
Preferred Stock: Authorised 100000 cumulative preferred shares of $3 each | ||||||||||
Issued 12000 shares | $ 36,000 | |||||||||
Common Shares, Unlimited shares authorized | ||||||||||
Issued Common shares 57750 shares @ $1.25 par | $288,750 | |||||||||
Additional paid in capital -Prederred shares | $228,000 | |||||||||
Additional opaid in capital -Common shares | $12,750 | |||||||||
Retained Earning | $421,500 | |||||||||
Total Stockholders Equity | $ 987,000 | |||||||||