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1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em.... Paragraph Styles Question 8 Rolman Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. In its first year, the company has the following stock transactions. Jan. 10 July 1 stock is currently selling on a national exchange at $8.25 per share. Sept. 1 Dec. 1 Instructions (a) Journalize the transactions (b) Prepare the stockholders' equity section assuming the company had retained earnings of $200,000 at December 31. Issued 400,000 shares of stock at $8 per share. Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The Purchased 10,000 shares of common stock for the treasury at $9 per share. Sold 4,000 shares of the treasury stock at $10 per share

Explanation / Answer

10-Jan Cash 3200000 Common stock 2000000 Paid-in Capital in Excess of Par Value 1200000 (To record issuance of 400,000 shares of $5 par value stock) 01-Jul Land 825000 Common Stock 500000 Paid-in Capital in Excess of Par Value 325000 (To record issuance of 100,000 shares of $5par value stock for land) 01-Sep Treasury Stock 90000 Cash 90000 (To record purchase of 10,000 shares of treasury stock at cost)) 01-Dec Cash 40000 Treasury Stock 36000 Paid-in Capital from Treasury Stock 4000 (To record sale of 4,000 shares of treasury stock above cost) ROLMAN CORPORATION Balance Sheet (partial) Stockholders’ equity Paid-in capital Capital stock Common stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued, 494,000shares outstanding 2500000 Additional paid-in capital 1525000 In excess of par value 4000 Total additional paidin capital 1529000 Retained earnings 200000 Total paid-in capital and retained earnings 4229000 Less:Treasury stock (6,000 shares) 54000 Total stockholders’ equity 4175000

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