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please show all the calcualtions, thanks! The xxx inc. had equity on December 31, 2015, as...

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.

Solutions

Expert Solution

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

ekkarill92 answered 2 years ago
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