P13.3A LO 1, 2, 3) Financial StatementThe stockholders' equity accounts of Castle Corporation on January 1, 2020, were as followsJournalize and post transactions, and prepare stockholders' equity sectionGLSPreferred Stock (8%, $50 par, 10,000 shares authorized)Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000Paid-in Capital in Excess of Par-Preferred StockPaid-in Capital in Excess of Stated Value Common Stock1,450,000Retained EarningsTreasury Stock (10,000 common shares)$400,000100,0001,816,00050,000During 2020, the corporation had the following transactions and events pertaining to its stockholders' equityFeb.1 Issued 25,000 shares of common stock for $120,000Apr. 14 Sold 6,000 shares of treasury stock-common for $33,000Sept. 3 lssued 5,000 shares of common stock for a patent valued at $35,000Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000Dec. 31 Determined that net income for the year was $452,000No dividends were declared during the year.Instructionsa. Journalize the transactions and the closing entry for net incomeb. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J5 for the posting reference.)c. Prepare a stockholders' equity section at December 31, 2017Total stockholders' equity $5,350,000

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Asked Jan 22, 2019
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P13.3A LO 1, 2, 3) Financial Statement
The stockholders' equity accounts of Castle Corporation on January 1, 2020, were as follows
Journalize and post transactions, and prepare stockholders' equity section
GLS
Preferred Stock (8%, $50 par, 10,000 shares authorized)
Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par-Preferred Stock
Paid-in Capital in Excess of Stated Value Common Stock1,450,000
Retained Earnings
Treasury Stock (10,000 common shares)
$400,000
100,000
1,816,000
50,000
During 2020, 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 lssued 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
a. Journalize the transactions and the closing entry for net income
b. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J5 for the posting reference.)
c. Prepare a stockholders' equity section at December 31, 2017
Total stockholders' equity $5,350,000
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P13.3A LO 1, 2, 3) Financial Statement The stockholders' equity accounts of Castle Corporation on January 1, 2020, were as follows Journalize and post transactions, and prepare stockholders' equity section GLS Preferred Stock (8%, $50 par, 10,000 shares authorized) Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000 Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Stated Value Common Stock1,450,000 Retained Earnings Treasury Stock (10,000 common shares) $400,000 100,000 1,816,000 50,000 During 2020, 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 lssued 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 a. Journalize the transactions and the closing entry for net income b. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J5 for the posting reference.) c. Prepare a stockholders' equity section at December 31, 2017 Total stockholders' equity $5,350,000

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Expert Answer

Step 1
  1.  

                                                                     In the books of Castle Corporation

Journal Entries

Date

Accounts & Explanations

Debit  $

Credit $

2020

 

 

 

Feb 1

Cash

$120,000

 

 

    Common Stock ($1)  (Refer note 1)

 

25,000

 

    Paid In Capital in Excess of Stated Value-Common stock

 

95,000

 

(Common stock issued)

 

 

 

 

 

 

Apr 14

Cash

33,000

 

 

      Treasury stock (Note 2)

 

33,000

 

(6,000 shares of treasury stock sold)

 

 

 

 

 

 

Sep 3

Patent

35,000

 

 

    Common stock ( Note 3)

 

5,000

 

    Paid In Capital in Excess of Stated Value-Common stock

 

30,000

 

(Patent purchased by issuing stock capital)

 

 

 

 

 

 

Nov 10

Treasury Stock

6,000

 

 

     Cash

 

1,000

 

(Treasury stock purchased in Cash)

 

 

 

 

 

 

Dec 31

Net Income-Income statement

452,000

 

 

       Retained Earnings

 

452,000

 

(Closing entry for the Net Income)

 

 

 

Working Notes:

  1. Since, the stated value of the common stock is $1, the capital has been credited by $25,000 and the remaining amount in excess paid in capital
  2. The treasury stock has been credited by the amount realized on sale irrespective of the cost at which it was purchased.
  3. Since, the stated value of common stock is $1, we have credited the common stock by $5,000 and $30,000 as excess paid in capital
...

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