After establishing your company’s fiscal year-end to be October 31, you and Greg begin operating Sunrise Bakery Inc. on November 1, 2021. On that date, after the issuance of shares, the paid-in capital section of the company’s balance sheet is as follows. Paid-in capital Preferred stock, $0.50 noncumulative, no par value, 10,000 shares authorized; 2,000 shares issued $10,000 Common stock, no par value, 100,000 shares Authorized; 33,215 shares issued 33,215 Sunrise Bakery Inc. has the following selected transactions during its first year of operations. Dec. 1 Issues an additional 900 preferred shares to your sibling for $4,500. Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1. June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets. Oct. 31 The company has had a very successful first year of operations. It earned revenues of $468,500 and incurred expenses of $366,050 (including $750 legal fee but excluding income tax). 31 Records income tax expense. (The company has a 20% income tax rate.) 31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1. Required part C Prepare the journal entries to record the above transactions. Prepare the retained earnings statement for the year. Prepare closing entries.
After establishing your company’s fiscal year-end to be October 31, you and Greg begin operating Sunrise Bakery Inc. on November 1, 2021. On that date, after the issuance of shares, the paid-in capital section of the company’s balance sheet is as follows.
Paid-in capital
Preferred stock, $0.50 noncumulative, no par value,
10,000 shares authorized; 2,000 shares issued $10,000
Common stock, no par value, 100,000 shares
Authorized; 33,215 shares issued 33,215
Sunrise Bakery Inc. has the following selected transactions during its first year of operations.
Dec. 1 Issues an additional 900
Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1.
June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets.
Oct. 31 The company has had a very successful first year of operations. It earned revenues of $468,500 and incurred expenses of $366,050 (including $750 legal fee but excluding income tax).
31 Records income tax expense. (The company has a 20% income tax rate.)
31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1.
Required part C
- Prepare the
journal entries to record the above transactions. - Prepare the
retained earnings statement for the year. - Prepare closing entries.
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