The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2018, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 32,500 shares $3,250,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 442,000 shares 2,210,000 Paid-in capital in excess of par—preferred 87,000 Paid-in capital in excess of par—common 875,000 Retained earnings 2,980,000 $9,402,000 The following events occurred during 2019: Jan. 5 10,000 shares of authorized and unissued common stock were sold for $6 per share. 16 12,000 shares of authorized and unissued preferred stock were sold for $107 per share. Apr. 1 78,000 shares of common stock were repurchased for the treasury at a price of $17 per share. Superior uses the cost method to account for treasury stock. Sept. 1 2,500 shares of preferred stock are issued in exchange for a piece of land. The land has an appraised value of $280,500. The preferred stock currently trades on the New York Stock Exchange at a price of $109 per share. Dec. 1 25,000 shares of treasury stock are reissued at a price of $25 per share. Required: 1. Prepare journal entries for each of the above transactions. 2. Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2019. 3. Calculate Superior’s legal capital at December 31, 2019.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2018, is as follows:

Shareholders’ Equity
Preferred stock, $100 par value; authorized, 300,000 shares; issued, 32,500 shares	$3,250,000
Common stock, $5 par value; authorized, 2,000,000 shares; issued, 442,000 shares	2,210,000
Paid-in capital in excess of par—preferred	87,000
Paid-in capital in excess of par—common	875,000
Retained earnings	2,980,000
	$9,402,000

The following events occurred during 2019:

Jan. 5	10,000 shares of authorized and unissued common stock were sold for $6 per share.
16	12,000 shares of authorized and unissued preferred stock were sold for $107 per share.
Apr. 1	78,000 shares of common stock were repurchased for the treasury at a price of $17 per share. Superior uses the cost method to account for treasury stock.
Sept. 1	2,500 shares of preferred stock are issued in exchange for a piece of land. The land has an appraised value of $280,500. The preferred stock currently trades on the New York Stock Exchange at a price of $109 per share.
Dec. 1	25,000 shares of treasury stock are reissued at a price of $25 per share.

Required:

1.	Prepare journal entries for each of the above transactions.
2.	Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2019.
3.	Calculate Superior’s legal capital at December 31, 2019.

CHART OF ACCOUNTS

Superior Corporation

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
180	Land
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
305	Preferred Stock
311	Common Stock
318	Additional Paid-in Capital on Preferred Stock
320	Additional Paid-in Capital on Common Stock
321	Additional Paid-in Capital on Treasury Stock
331	Retained Earnings
335	Treasury Stock

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
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12
13
14

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