Goldwing Corporation is a public company. Its article of incorporation authorize

Question

Goldwing Corporation is a public company. Its article of incorporation authorizes the issuance of an unlimited number of common shares and 50,000 preferred shares with a $2 dividend. At the beginning of the December 31, 2017 year, the opening account balances indicated that 25,000 common shares had been issued for $4 per share, and no preferred shares had been issued. Opening retained earnings were $365,000. The transactions during the year were as follows: Jan. 15 Issued 10,000 common shares at S6 per share. Feb. 12 Issued 2,000 preferred shares at $60 per share. 2 Issued 5,000 common shares in exchange for land valued at $25,000. Sept. Oct. 31 Declared and paid a dividend on preferred shares of $2 per share. Nov. 1 Declared and paid a dividend on common shares of $1.50 per share. Nov. 15 Purchased and retired 500 preferred shares at $62 per share. 15 Dec. 31A $232,000. Instructions (a) Prepare journal entries to record the transactions above. (b) Prepare the closing er

Explanation / Answer

Solution:

Jounral Entries - Goldwing Corporation Date Particulars Debit Credit 15-Jan Cash Dr $60,000.00            To Common Stock $40,000.00            To Paid in Capital in excess of par value - common Stock $20,000.00 (Being 10000 shares for $4 par value issued at $6) 12-Feb Cash Dr $120,000.00            To Preferred Stock $120,000.00 (Being 2000 perference share issued at $60 per share) 2-Sep Land Dr $25,000.00            To Common Stock $20,000.00            To Paid in Capital in excess of par value - common Stock $5,000.00 (Being Land purchased on exchange of common stock) 31-Oct Retained Earnings Dr $4,000.00            To Dividend Payable $4,000.00 (Being dividend declared on preference shares) 31-Oct Dividend Payable Dr $4,000.00            To Cash $4,000.00 (Being dividend paid to preference shares) 1-Nov Retained Earnings Dr $60,000.00            To Dividend Payable (40000*$1.50) $60,000.00 (Being dividend declared on common shares) 1-Nov Dividend Payable Dr $60,000.00            To Cash $60,000.00 (Being dividend paid to common shareholders) 14-Nov Preferred Stock Dr $120,000.00 Premium on redemption Dr $4,000.00            To Cash $124,000.00 (Being preference share redeemed) 31-Dec Income Summary Dr $232,000.00            To Retained Earnings $232,000.00 (Being income summary transferred to retained earnings)

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