4, 5, 6 P11-8A. Stockholders\' Equity Transactions, Journal Entries, and T-Accou

Question

4, 5, 6 P11-8A. Stockholders' Equity Transactions, Journal Entries, and T-Accounts The stockholders of Fremantle Corporation at January 1 follows 8 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding. Common stock, $1 par value, 100,000 shares 500,000 authorized; 40,000 shares issued and outstanding Paid-in capital in excess of par value-Preferred stock . . . . . . .. . . . . . . . . . . . . . . Paid-in capital in excess of par value-Common stock . . . . . 40,000 200,000 The following transactions, among others, occurred during the year: Jan. Mar. 1 Announced a 2-for-1 common stock split, reducing the par value of the common stock to $0.50 per share. 31 Converted $75,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 110 shares of common stock June 1 Acquired equipment with a fair market value of $45,000 in exchange for 300 shares o preferred stock. Acquired 15,000 shares of common stock for cash at $20 per share. Issued 5,000 shares of common stock at $22 cash per share. Sold 1,000 treasury shares at $23 per share. 1 Sept. Nov. Dec. 21 28 31 Closed net income of $125,000, to the Retained Earnings account. Required a. Set up T-accounts for the stockholders' equity accounts as of the beginning of the year the January I balances. Prepare journal entries for the given transactions and post them to thstcion.bd additional Taccounts needed). Do not prepare the journal entry for the Dec. 31 tra post the appropriate amount to the Retained Earnings T-account. Determine the for the stockholders' equity accounts. (set b.

Explanation / Answer

Journal Entries Date Accounting Titles Explanation Debit Credit Jan-1 Common Stock ($1 Par Value) $40,000 Common Stock ($0.50 Par Value) $40,000 (Being common stock annouced to split 2 for 1) Mar-31 Bond Payable $75,000 Bond Premium $8,000 Common Stock ($0.50 Par Value) $4,125 ($75000/$1000= 75 Bonds X 110 Share X $0.50 per share) Paid in capital in excess of par value- Common Stock $78,875 (Being bond converted in to common stock of 110 share per bond) Jun-1 Equipment $45,000 8% Preferred Stock $30,000 (300 Shares X $100 per share) Paid in capital in excess of par value- Preferred Stock $15,000 (Being equipment purchased through issue of preferred stock) Sep-1 Treasury Stock $300,000 (15000 shares X 20 per share) Cash $300,000 (15000 shares X 20 per share) (Being 15,000 common stock repurchased ) Nov-21 Cash $110,000 Common Stock ($0.50 Par Value) $2,500 (5000 shares X 0.50 per share) Paid in capital in excess of par value- Common Stock $107,500 (5000 shares X 21.50 per share) (Being 5,000 common stock issued) Dec-28 Cash $23,000 (1000 shares X 23 per share) Paid in capital in excess of par value- Common Stock $3,000 (1000 shares X (23-20) per share) Treasury Stock $20,000 (1000 shares X 20 per share) (Being 1000 treasury share issued at $23 per share) T-Accounts (Opening & Closing balance) Common Stock ($1 Par Value) Particulars Amount Particulars Amount To, Common Stock ($0.50 Par Value) $40,000 By, Balance b/f $40,000 By, Balance c/f $0 Total $40,000 Total $40,000 Common Stock ($0.50 Par Value) Particulars Amount Particulars Amount By, Balance b/f $0 By, Common Stock ($1 Par Value) $40,000 By, Bond Payable $4,125 To, Balance c/f $46,625 By, Cash $2,500 Total $46,625 Total $46,625 Paid in capital in excess of par value- Common Stock Particulars Amount Particulars Amount By, Balance b/f $800,000 By, Bond Payable $78,875 To, Balance c/f $989,375 By, Cash $107,500 By, Cash $3,000 Total $989,375 Total $989,375 8% Preferred Stock Particulars Amount Particulars Amount By, Balance b/f $500,000 To, Balance c/f $530,000 By, Equipment $30,000 Total $530,000 Total $530,000 Paid in capital in excess of par value- Preferred Stock Particulars Amount Particulars Amount By, Balance b/f $200,000 To, Balance c/f $215,000 By, Equipment $15,000 Total $215,000 Total $215,000 Retained Earning Particulars Amount Particulars Amount By, Balance b/f $625,000 To, Balance c/f $750,000 By, P/L $125,000 Total $750,000 Total $750,000 Ending Stockholder's Equity 8% Preferred Stock $100 par value (20300 Shares) $530,000 Common Stock $0.50 per Share (93250 shares) $46,625 Treasury Stock (Contra) (14000 Shares) ($280,000) Paid in capital in excess of par value- Preferred Stock $215,000 Paid in capital in excess of par value- Common Stock $989,375 Retained Earnings $750,000 Total Stockholders' Equity $2,251,000

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.