12. Masters Corporation charter authorizes 7,800,000 shares of common stock and
ID: 2534914 • Letter: 1
Question
12. Masters Corporation charter authorizes 7,800,000 shares of common stock and 760,000 shares of preferred stock and the company had the following transactions in 2015, ts first year of operations Issued 1,800,000 shares of common stock. Stock has par value of $35.00 per share and was issued for cash at $63.00 per share Issued 180,000 shares of $210 par value preferred stock. Shares were issued for cash at par Earned net income of $1.800.000. Dividends of $750,000 declared and paid in cash. Required: 1. 2. Journalize the above transactions in the books of Masters Corporation. (5 Marks) Prepare the stockholders' equity section of the balance sheet at December 31. 2015. (5 Marks)Explanation / Answer
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No. Account Titles and Explanation Debit Credit 1 Cash (1800000 x $63) 113400000 Common stock (1800000 x $35) 63000000 Paid-in capital in excess of par-common 50400000 (To record issuance of common stock) 2 Cash (180000 x $210) 37800000 Preferred stock 37800000 (To record issuance of preferred stock) 3 Income summary 1800000 Retained earnings 1800000 (To record close of net income to retained earnings) 4 Dividends/Retained earnings 750000 Cash 750000 (To record cash dividends declared and paid)Related Questions
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