Question

In: Accounting

Problem 15-1 On January 5, 2017, Crane Corporation received a charter granting the right to issue...

Problem 15-1

On January 5, 2017, Crane Corporation received a charter granting the right to issue 5,400 shares of $100 par value, 7% cumulative and nonparticipating preferred stock, and 46,800 shares of $10 par value common stock. It then completed these transactions.

Jan. 11 Issued 19,700 shares of common stock at $16 per share.
Feb. 1 Issued to Sanchez Corp. 3,800 shares of preferred stock for the following assets: equipment with a fair value of $46,000; a factory building with a fair value of $160,000; and land with an appraised value of $247,000.
July 29 Purchased 1,700 shares of common stock at $16 per share. (Use cost method.)
Aug. 10 Sold the 1,700 treasury shares at $15 per share.
Dec. 31 Declared a $0.40 per share cash dividend on the common stock and declared the preferred dividend.
Dec. 31 Closed the Income Summary account. There was a $168,200 net income.

Prepare the stockholders’ equity section of Crane Corporation’s balance sheet as of December 31, 2017. (Enter account name only and do not provide descriptive information.)

Solutions

Expert Solution

Stockholder's equity section of Crane corporation
Particulars Amount Amount
Capital stock
Preferred stock @100 380000
Common stock 19700@10 197000
total capital stock 577000
Additional paid in capital
paid in capital : preferred 73000
paid in capital : common 118200 191200
Total paid in capital 768200
Add: Retained earning (168200-1700-34480) 131820
total stockholder's equity 900020
Journal entries
Date Particulars Debit Credit
11-Jan cash (19700*16) 315200
common stock (19700*10) 197000
paid in capital excess 118200
( to record issue common share)
01-Feb equipment 46000
building 160000
land 247000
preferred stock (3800*100) 380000
paid in capital excess 73000
( to record issue prefferred share for land etc)
29-Jul treasury stock (1700*16) 27200
cash 27200
( to record treasury stock purchase)
10-Aug Cash (1700*15) 25500
retained earning (1700*1) 1700
to treasury stock (1700*16) 27200
31-Dec Retained earning 34480
common stock dividend (19700*0.40) 7880
preferred stock dividend (3800*100*7%) 26600
( to record dividend payable)
31-Dec Income summary 168200
retained earning 168200
( to record income summary)

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