Assume that Rendezvous Co. Ltd, a partnership between sisters Janet & Lisa will be formed on January 1, 2021 and that the company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. You have been asked to prepare the company’s journal entries and statement of owner’s equity based on the following information: Issued $65000.00 shares of common stock. Stock has par value of $0.40 per share and was issued at $30.00 per share. Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services Exchanged 200,000 shares of common stock for land with an appraised value of $500,000 and a building with an appraised value of $700,000. Earned Net income $750,000 Paid dividends to preferred shareholders as well as $2 per share to common stockholders. Using the info above and as a guide: 1. 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 2. Prepare the company's Stockholders equity section of the balance sheet at December 31, 2020. The following information must be clearly stated/shown: information on par values, the number of shares authorized and issued where necessary. the sub total for the total paid in capital. Retained earnings. total stockholders’ equity.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 57E: Outstanding Stock Lars Corporation shows the following information in the stockholders equity...

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Assume that Rendezvous Co. Ltd, a partnership between sisters Janet & Lisa will be formed on January 1, 2021 and that the company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. You have been asked to prepare the company’s journal entries and statement of owner’s equity based on the following information:

Issued $65000.00 shares of common stock. Stock has par value of $0.40 per share and was issued at $30.00 per share.
Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services
Exchanged 200,000 shares of common stock for land with an appraised value of $500,000 and a building with an appraised value of $700,000.
Earned Net income $750,000
Paid dividends to preferred shareholders as well as $2 per share to common stockholders.

Using the info above and as a guide:

1. 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

2. Prepare the company's Stockholders equity section of the balance sheet at December 31, 2020. The following information must be clearly stated/shown:

information on par values,
the number of shares authorized and issued where necessary.
the sub total for the total paid in capital.
Retained earnings.
total stockholders’ equity.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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