2) Sypster\'s Soda Corporation had 9 transactions affecting its stockholders\' e

Question

2) Sypster's Soda Corporation had 9 transactions affecting its stockholders' equity accounts in the year 2018. The T-accounts below show the activity for the company's equity accounts Common Stock-$20 par value, 60,000 shares authorized Paid-in Capital in excess of par value, common stock Cash (partial transactions Bal 1/1 Unknown 80,000 64,000 Bal 11 36,000 Jul 01 Jan 02 Jul 09 38,400 43,200 Feb 28 Aug 27 32,00063,360 Oct 22 200,000 Jul 01 Jul01 236,000 Bal 1231 Unknown 1.000,000 Bal 12/31 100,000 Bal 12/31 Common Dividend Pavable ea stock, common Retained Earnings Jan 07 43,200 347,000 Bal 11 Aug 27Aug 27 1,600 54,000 Dec 31 Feb 28 43,200 43,200 Jan 07 Oct 22 63,360 Jan 02 80,00032,000 Jul 09 Sep 09 63,360 Bal 12 292,840 Bal 1231 0- Bal 1231 Paid-in Capital, Treasury Stock Income Summ Aug 27 6400 6,400 Jul 09 Clep) 300,000 354,000 Clel) Dec 31 54,000

Explanation / Answer

JE # Date Account Debit Credit 1 2-Jan-18 Treasury Stock, common $80,000 To Cash $80,000 Description : 4000 shares were repurchased at par value of $ 20, treasury stock, common share was debited for the amount and cash was credited 2 7-Jan-18 Retained Earnings $43,200 To Common Dividend payable $43,200 Description : Dividend of $ 43200 has been declared on outstanding common stock, hence retained earnings is debited and common dividend payable is credited 3 28-Feb-18 Common Dividend payable $43,200 To Cash $43,200 Description : Common Stock dividend declared on 07-Jan-2018 was paid on 28-Feb-2018, cash was credited and common dividend payable debited 4 1-Jul-18 Cash $236,000 To Common Stock $200,000 To Paid in capital in excess of par value common stock $36,000 Description : 10000 shares are issued having par value $ 20 for $ 23.60, cash has been debited for the money received on issuance, common stock is credited for the par value and paid in capital is credited for the amount above par value 5 9-Jul-18 Cash $38,400 To Treasury Stock, common $32,000 To Paid in capital, Treasury stock $6,400 Description : 1600 shares have been reissued which were re purchased earlier having par value of $ 20 for $24, cash account has been debited for cash received on issuance, treasury stock, common is credited for par value and paid in capital for price above par value 6 27-Aug-18 Cash $32,000 Retained Earnings $1,600 Paid-in Capital, Treasury Stock $6,400 To Treasury Stock, common stock $40,000 Description : 2000 shares have been reissued which were re purchased earlier having par value of $ 20 for $16,means they have been issued at discount cash account has been debited for cash received on issuance, treasury stock, common is credited for par value and paid in capital and retained earnings for price below par value 7 9-Sep-18 Retained Earnings $63,360 To Common Dividend payable $63,360 Description : Dividend of $ 63360 has been declared on outstanding common stock, hence retained earnings is debited and common dividend payable is credited 8 22-Oct-18 Common Dividend Payable $63,360 To Cash $63,360 Description : Common Stock dividend declared on 09-Sept-2018 was paid on 22-Oct-2018, cash was credited and common dividend payable debited 9 31-Dec-18 Income Summary $54,000 To Retained Earnings $54,000 Description : Net income was transferred to retained earnings at the end of the year SODA CORPORATION Statement of Retained Earnings For the year ended 31st Dec 2018 Retained earnings, Beginning balance $347,000 Add : Net Income, current year $54,000 Less : Stock issued at discount $1,600 Dividend paid (43200+63360) 106560 Retained earnings, ending balance $292,840 SODA CORPORATION Partial Balance Sheet 2017 2018 60000 shares authorised, 40000 shares issued for $ 20 par value $800,000 60000 shares authorised, 50000 shares issued for $ 20 par value, of which 400 are held in treasury stock $1,000,000 Additional paid in capital - common stock $64,000 $100,000 Total paid-in capital $864,000 $1,100,000 Retained Earnings $347,000 $292,840 Subtotal $1,211,000 $1,392,840 Less : treasury Stock (400 shares of common stock at $ 20 cost) $8,000 Total Stockholders Equity $1,211,000 $1,384,840

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