Question
In: Accounting
January 1, 2017, the stockholders’ equity section of Jayhawk Corporation’s balance sheet showed the following Preferred...
January 1, 2017, the stockholders’ equity section of Jayhawk Corporation’s balance sheet
showed the following
Preferred stock, $100 par value, 5%, 50,000 shares authorized,
5,000 shares issued and outstanding
$500,000
Paid in capital in excess of par, Preferred Stock
100,000
Common stock, $3 par value, 500,000 shares authorized,
20,000 shares issued and outstanding
60,000
Paid in capital in excess of par, Common Stock
250,000
Total contributed Capital
910,000
Retained Earnings
320,000
Total Stockholders' Equity
$1,230,000
During the year, 2017, the following transactions occurred:
February 2
Issued 600 shares of common stock for $16 per share.
April 15
Issued 1,000 shares of preferred stock for $125 per share.
September 15 Declared dividends of $60,000 to be paid on October 31, 2017.
October 31
Paid the dividends declared on September 15.
Required (10 points):
a. Prepare journal entries to record the above transactions.
b. Assuming that net income was $93,000, prepare the stockholders’ equity section of the
balance sheet at December 31, 2017.
Solutions
Expert Solution
1)
| Date | Account title | Debit | credit |
| Feb 2 | cash (600*16) | 9600 | |
| common stock (600*3) | 1800 | ||
| Paid in capital in excess of par, Common Stock | 7800 | ||
| April 15 | cash (1000*125) | 125000 | |
| preferred stock (1000*100) | 100000 | ||
| Paid in capital in excess of par, Preferred Stock | 25000 | ||
| September 15 | Cash Dividend | 60000 | |
| cash dividend payable -preferred | 30000 | ||
| cash dividend payable -common stock | 30000 | ||
| october 31 | cash dividend payable -preferred | 30000 | |
| cash dividend payable -common stock | 30000 | ||
| cash |
**preferred dividend = [500000+100000]*5%=30000
b)
|
Jayhawk Corporation’s stockholders’ equity section as on December 31, 2017. |
||
|
Preferred stock, $100 par value, 5%, 50,000 shares authorized, 6,000 shares issued and outstanding |
600000 | |
| Paid in capital in excess of par, Preferred Stock (100000+25000) | 125000 | |
|
Common stock, $3 par value, 500,000 shares authorized, 20,600 shares issued and outstanding |
61800 | |
| Paid in capital in excess of par, Common Stock (250000+7800) | 257800 | |
| Total contributed capital | 1044600 | |
| Retained earning (320000+93000-60000) | 353000 | |
| Total stockholders equity | 1397600 | |
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