4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. Prepare the company's journal entries and statement of owner's equity based on the following information which is grouped according to the First name Initial. The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues shares of common stock with $1.00 par value. The land has been appraised at a market value of i) First Name Initial # of shares issued Value of land J. J 390,000 $1,520,000 ii) The company sold shares of common stock with $1 par value First Name Initial # of shares issued J. J 140,000 iii). Issued shares of $ par value preferred stock. Shares were issued at par. First Name Initial # of shares issued Par value J.J 26,000 $22 IV). Earned net income of $ First Name Initial Net Income J.J $950,000 V. Dividend declared and paid - $0.15 per share on common stock Vi) Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: A. Prepare the Journal entries and closing entries for the above transaction B. Prepare the owner's equity section of the balance sheet based on the info above.
4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. Prepare the company's journal entries and statement of owner's equity based on the following information which is grouped according to the First name Initial. The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues shares of common stock with $1.00 par value. The land has been appraised at a market value of i) First Name Initial # of shares issued Value of land J. J 390,000 $1,520,000 ii) The company sold shares of common stock with $1 par value First Name Initial # of shares issued J. J 140,000 iii). Issued shares of $ par value preferred stock. Shares were issued at par. First Name Initial # of shares issued Par value J.J 26,000 $22 IV). Earned net income of $ First Name Initial Net Income J.J $950,000 V. Dividend declared and paid - $0.15 per share on common stock Vi) Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: A. Prepare the Journal entries and closing entries for the above transaction B. Prepare the owner's equity section of the balance sheet based on the info above.
Chapter14: Corporation Accounting
Section: Chapter Questions
Problem 13PB: You are a consultant working with various companies that are considering incorporating and listing...
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Transcribed Image Text:Requirements:
1. State three (3) of the main advantage they gain by selecting a corporate form of business now.
2. Would you recommend they initially issue preferred or common stock? Why?
3. If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what
is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give
the reason for your answer.
4. Assume one year later (2019) the company KY Jeweller's Ltd has been formed and the owners are desirous of
companying several financial transactions and possible outcomes to assist in guiding their decision-making process.
Prepare the company's journal entries and statement of owner's equity based on the following information which is
grouped according to the First name Initial.
The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the
following are the transactions for consideration:
KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues
shares of common stock with $1.00 par value. The land has been appraised at a market value of
i)
First Name Initial
# of shares issued
Value of land
J. J
390,000
$1,520,000
ii)
The company sold
shares of common stock with $1 par value
First Name Initial
# of shares issued
J. J
140,000
iii). Issued
shares of $
par value preferred stock. Shares were issued at par.
First Name Initial
# of shares issued
Par value
J.J
26,000
$22
IV). Earned net income of $_
First Name Initial
Net Income
J.J
$950,000
V. Dividend declared and paid - $0.15 per share on common stock
Vi) Dividend declared and paid - $5 per share on preferred stock
Using the information above and as guided:
A. Prepare the Journal entries and closing entries for the above transaction
B. Prepare the owner's equity section of the balance sheet based on the info above.
Expert Solution
Step 1
Journal Entries
| Sr. No. | Particulars | LF | Debit ($) | Credit ($) |
| i | Land | 390,000 | ||
| Common Stock Capital | 390,000 | |||
| (To record the purchase of land and issue common stock) | ||||
| Land | 1,130,000 | |||
| Revaluation / Profit and Loss a/c | 1,130,000 | |||
| (To record the appreciation of land) | ||||
| ii | Cash / Bank | 140,000 | ||
| Common Stock Capital | 140,000 | |||
| (To record the Common Stock issued) | ||||
| iii | Bank | 572,000 | ||
| Preferred Stock Capital | 572,000 | |||
| (To record the issuance of Preferred Stock Capital) | ||||
| iv | Cash / Bank | 950,000 | ||
| Income | 950,000 | |||
| (To record the net income) | ||||
| v | Profit and Loss A/c | 79,500 | ||
| Dividend Payable | 79,500 | |||
| (To record the dividend payable on common stock 530,000 shares @ 0.15 $ each) | ||||
| Dividend Payable | 79,500 | |||
| Cash/bank | 79,500 | |||
| (To record the dividend payable) | ||||
| vi | Profit and Loss A/c | 130,000 | ||
| Dividend Payable | 130,000 | |||
| (To record the dividend payable on preferred stock 26,000 shares @ $5 per share) | ||||
| Dividend Payable | 130,000 | |||
| Cash/bank | 130,000 | |||
| (To record the dividend payable) |
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