If early in the year bill sharnes and several friends organized a coroporation called sharnes communications inc. The Stockholders' equity is: 884,200
What is the Stockholders' equity?
a. Journal entries
Jan. 6
Debit Cash 280,000
(20,000 * 14)
Credit Common stock 40,000
(20,000 * 2)
Credit Additional paid-in capital-Common stock 240,000
(20,000 * 12)
Jan. 7
Debit Organization cost 7,000
Credit Common stock 1,000
(500 * 2)
Credit Additional paid in capital-Common stock 6,000
Jan. 12
Debit Cash 250,000
Credit Preferred stock 250,000
Jun. 4
Debit Land 225,000
(15,000 * 15)
Credit Capital stock 30,000
(15,000 * 2)
Credit Additional paid in capital-Common stock 195,000
Nov. 15
Debit Dividend-Preferred stock 25,000
(2,500 * 10)
Credit Dividend payable 25,000
Dec. 20
Debit Dividend payable 25,000
Credit Cash 25,000
Dec. 31
Debit Income summary 147,200
Credit Retained earnings 147,200
Dec. 31
Debit Retained earnings 25,000
Credit Dividend 25,000
b. Stockholders' equity
Issued 2,500 shares 100 at par 250,000
Add Issued and outstanding 35,500 shares of $2 par 71,000 (20,000 + 500 + 15,000) * 2
Add Additional paid-in capital-Common stock 441,000
Total paid-in capital 762,000
Add Retained earnings 122,200 147,200 - 25,000
Stockholders' equity 884,200
The complete question is:
Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. The corporation was authorized to issue 50,000 shares of $100 par value, 10 percent cumulative preferred stock, and 400,000 shares of $2 par value common stock. The following transactions (among others) occurred during the year:
Jan. 6 Issued for cash 20,000 shares of common stock at $14 per share. The shares were issued to Sharnes and 10 other investors.
Jan. 7 Issued an additional 500 shares of common stock to Sharnes in exchange for his services in organizing the corporation. The stockholders agreed that these services were worth $7,000.
Jan. 12 Issued 2,500 shares of preferred stock for cash of $250,000.
June 4 Acquired land as a building site in exchange for 15,000 shares of common stock. In view of the appraised value of the land and the progress of the company, the directors agreed that the common stock was to be valued for purposes of this transaction at $15 per share.
Nov. 15 The first annual dividend of $10 per share was declared on the preferred stock to be paid on December 20.
Dec. 20 Paid the cash dividend declared on November 15.
Dec. 31 After the revenue and expenses were closed into the Income Summary account, that account indicated a net income of $147,200.
a. Prepare journal entries in general journal form to record the above transactions. Include entries at December 31 to close the Income Summary account and the Dividends account.
b. Prepare the stockholders' equity section of the Sharnes Communications, Inc., balance sheet at December 31.