The owners are desirous of comparing several 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. In addition, E&B Comic Bookstore Company’s charter will authorize 1,200,000 shares of common stock (to be divided into two classes (700,000 shares class A -voting rights and 500,000 shares class B -nonvoting rights) and 400,000, $145 par value (see info below), 5% cumulative preferred stock. A. Issued 50% shares of class A common stock. Stock has par value of $45 per share and was issued at $75 per share. B. Issued 50% shares of no-par class B stock. Issued price $70. C. Issued 25% shares of preferred stock at par value. Par value $145 D. Exchanged 40% shares of class A common stock for Office Furniture and Equipment with an appraised value of $4,000,000 and Motor Truck with an appraised value of $10,000,000 E. Earned Net income $1,400,000. F. Declared interim dividends for preferred shareholders as well as $.80 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 declared. • Close out dividend to retained earnings. B. Prepare the company’s Stockholders equity section of the balance sheet at December 31, 2020. • 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 several 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. In addition, E&B Comic Bookstore Company’s charter will authorize 1,200,000 shares of common stock (to be divided into two classes (700,000 shares class A -voting rights and 500,000 shares class B -nonvoting rights) and 400,000, $145 par value (see info below), 5% cumulative preferred stock.
A. Issued 50% shares of class A common stock. Stock has par value of $45 per share and was issued at $75 per share.
B. Issued 50% shares of no-par class B stock. Issued price $70.
C. Issued 25% shares of preferred stock at par value. Par value $145
D. Exchanged 40% shares of class A common stock for Office Furniture and Equipment with an appraised value of $4,000,000
and Motor Truck with an appraised value of $10,000,000
E. Earned Net income $1,400,000.
F. Declared interim dividends for preferred shareholders as well as $.80 per share to common stockholders.
Using the info above and as a guide:
A. Prepare the
• The issuances of stock.
• Close out net income to
• Dividend declared.
• Close out dividend to retained earnings.
B. Prepare the company’s
• 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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