Mulberry Street Inc. began business on January 1, 2011 by issuing all of its 3,0
ID: 2346542 • Letter: M
Question
Mulberry Street Inc. began business on January 1, 2011 by issuing all of its 3,000 authorized shares of its $2 par value common stock for $9 per share. On June 30, they declared a cash dividend of $1.90 per share to stockholders of record on July 31. They paid the cash dividend on August 30. On November 1, Mulberry Street reacquired 300 of its own shares of stock for $11 per share.
Prepare all of the necessary journal entries to record the events described above. (Omit the "$" sign in your response.)
Prepare the Stockholders' Equity section of the Balance sheet as of 12/31/2011 assuming that the Net Income for the year was $49,000. (Negative amounts should be indicated by a minus sign.Omit the "$" sign in your response.)
a.Prepare all of the necessary journal entries to record the events described above. (Omit the "$" sign in your response.)
Explanation / Answer
Mulberry Street Inc. began business on January 1, 2011 by issuing all of its 3,000 authorized shares of its $2 par value common stock for $9 per share. On June 30, they declared a cash dividend of $1.90 per share to stockholders of record on July 31. They paid the cash dividend on August 30. On November 1, Mulberry Street reacquired 300 of its own shares of stock for $11 per share. 1Jan 2011 Cash Dr 27,000 Commmon stock Cr 6000 Addl paidin capital Cr 21,000 30 Jun2011 Retained earnings Dr 5700 Div payable Cr 5700 (Div $1.90*3000 shares = $5700) 30 Aug2011 Div Payable Dr 5700 Cash Cr 5700 1 Nov 2011 Treasury Stock Dr 3300 Cash Cr 3300 Common stock, $2par(3000 shares authorized, 3000 shares issued & outsrtanding) $6,000 Additional paid-in capital $21,000 ------------------------------------------------- Total Paid in Capital $27,000 Retained earnings (49000-5700) $43,300 Less: Treasury Stock ($3300) ---------------------------------------- Total Shareholders Equity $67,000
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