Problems P11-3A. The stockholders’ equity accounts of Castle Corporation on Janu
ID: 2717371 • Letter: P
Question
Problems
P11-3A. The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as follows.
Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized) $ 400,000
Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par—Preferred Stock 100,000
Paid-in Capital in Excess of Stated Value—Common Stock 1,450,000
Retained Earnings 1,816,000
Treasury Stock (10,000 common shares) 50,000
During 2015, the corporation had the following transactions and events pertaining to its stockholders’ equity.
Feb. 1 Issued 25,000 shares of common stock for $120,000.
Apr. 14 Sold 6,000 shares of treasury stock—common for $33,000.
Sept. 3 Issued 5,000 shares of common stock for a patent valued at $35,000.
Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31 Determined that net income for the year was $452,000.
No dividends were declared during the year.
Instructions
Journalize the transactions and the closing entry for net income.
Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J5 for the posting reference.)
Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of the preferred dividends in arrears.
Explanation / Answer
Journal
stockholders’ equity section
Feb. 1 Cash 120000 Common Stock 25000 Paid-in Capital in Excess of 95000 Apr. 14 Cash 33000 Paid-in Capital 3000 Treasury Stock 30000 Sept. 3 Patents 35000 Common Stock 5000 Paid-in Capital 30000 Nov. 10 Treasury Stock 6000 Cash 6000 Dec. 31 Net Income 4,52,000 Reatined earning 4,52,000Related Questions
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