A) Prepare the journal entries with narrations to record the following: The issuances of stock. Close out net income to retained earnings. Dividend paid. Close out dividend to retained earnings. B) Prepare Mulatto Company’s Stockholders equity section of the balance sheet at December 31, 2020. (Hint!!!!!!!) The following information must be clearly stated/shown: information on parvalues, the number of shares authorized and issued where necessary. the sub total for the total paid in capital. Retained earnings. total stockholders’ equity
The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020 and that Mulatto Company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative
- Issued 45,500 shares of common stock. Stock has par value of 0.30per share and was issued at $ 30.00 per share.
- Issued 8000 shares of preferred stock at par value as payment in exchange for legal services.
- Exchanged 160,000 shares of common stock for land with an appraised value of $400,000.00 and a building with an appraised value of $ 650,000.00.
- Earned Net income $ 650,000.00.
- Paid dividends to preferred shareholders as well as $2 per share to common stockholders.
Using the info above and as a guide:
- A) Prepare the journal entries with narrations to record the following:
- The issuances of stock.
- Close out net income to
retained earnings . - Dividend paid.
- Close out dividend to retained earnings.
- B) Prepare Mulatto Company’s
Stockholders equity section of the balance sheet at December 31, 2020. (Hint!!!!!!!) The following information must be clearly stated/shown:
- information on parvalues,
- the number of shares authorized and issued where necessary.
- the sub total for the total paid in capital.
- Retained earnings.
- total stockholders’ equity
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