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 preferred stock. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following info. Issued ________shares of common stock. Stock has par value of ___ per share and was issued at $____ per share. # of shares issued Par Value Issue price 100,000 $ 0.60 $ 30.00 Issued _______ shares of preferred stock at par value as payment in exchange for legal services. # of shares issued 14,000 Exchanged ______ shares of common stock for land with an appraised value of $______ and a building with an appraised value of $_____. # of shares issued Value of land Value of building 260,000 $650,000 $500,000 Earned Net income $______. Net Income $ 900, 000 Paid dividends to preferred shareholders as well as $2 per share to common stockholders. Using the info above and as a guide: 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. Prepare Mulatto 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.
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 preferred stock. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following info. Issued ________shares of common stock. Stock has par value of ___ per share and was issued at $____ per share. # of shares issued Par Value Issue price 100,000 $ 0.60 $ 30.00 Issued _______ shares of preferred stock at par value as payment in exchange for legal services. # of shares issued 14,000 Exchanged ______ shares of common stock for land with an appraised value of $______ and a building with an appraised value of $_____. # of shares issued Value of land Value of building 260,000 $650,000 $500,000 Earned Net income $______. Net Income $ 900, 000 Paid dividends to preferred shareholders as well as $2 per share to common stockholders. Using the info above and as a guide: 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. Prepare Mulatto 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.
Chapter12: S Corporations
Section: Chapter Questions
Problem 53P
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- 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 preferred stock. They have asked each student from your accounting course to prepare the company’s
journal entries and statement of owner’s equity based on the following info.
Issued ________shares of common stock. Stock has par value of ___ per share and was issued at $____ per share.
# of shares issued | Par Value | Issue price |
100,000 | $ 0.60 | $ 30.00 |
- Issued _______ shares of preferred stock at par value as payment in exchange for legal services.
# of shares issued |
14,000 |
Exchanged ______ shares of common stock for land with an appraised value of $______ and a building with an appraised value of $_____.
# of shares issued | Value of land | Value of building |
260,000 | $650,000 | $500,000 |
Earned Net income $______.
Net Income |
$ 900, 000 |
- Paid dividends to preferred shareholders as well as $2 per share to common stockholders.
Using the info above and as a guide:
- 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.
- Prepare Mulatto 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.
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