E11-5 Reporting Stockholders\' Equity and Determining Dividend Policy LO11-1, 11
ID: 2531746 • Letter: E
Question
E11-5 Reporting Stockholders' Equity and Determining Dividend Policy LO11-1, 11-3, 11-4
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Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, par value $10 per share, 11,600 shares authorized. During the year, the following selected transactions were completed:
a. Sold and issued 6,800 shares of common stock for cash at $20 per share. b. Sold and issued 1,600 shares of common stock for cash at $25 per share. c. At year-end, the accounts reflected income of $6,100. No dividends were declared.Explanation / Answer
Journal entry :
Stockholder's equity
Date accounts & expalnation debit credit Cash (6800*20) 136000 Common Stock 68000 Paid in capital in excess of par value-Common Stock 68000 (To record issue common stock) Cash (1600*25) 40000 Common Stock 16000 Paid in capital in excess of par value-Common Stock 24000 (To record issue common stock) Income summary 6100 Retained earnings 6100 (To record net income)Related Questions
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