The stockholders' equity accounts of Nijhum and Company Limited on January 1, 2021, were as follows. Preferred Stock (8%, Tk. 50 par, 10,000 shares authorized) Tk. 4, 00,000 Common Stock (Tk. 1 stated value, 2,000,000 shares authorized) 10, 00,000 Paid-in Capital in Excess of Par-Preferred Stock 1, 00,000 Paid-in Capital in Excess of Stated Value-Common Stock 14, 50,000 Retained Earnings 18, 00,000 During 2021, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 25,000 shares of common stock for Tk. 125,000. Apr. 14 Purchased 6,000 shares of treasury stock-common for Tk. 30,000. Sept. 3 Issued 5,000 shares of common stock for a patent valued at Tk. 40,000. Oct. 5 Sold 2,000 shares of treasury stock - common for Tk. 15,000. Nov. 10 Sold 1,000 shares of common stock for the treasury at a cost of Tk. 2,000. Dec. 31 Determined that net income for the year was Tk. 5, 00,000. No dividends were declared during the year. Required: a) Journalize the transactions and the closing entry for net income. b) Prepare a stockholders' equity section at December 31, 2021. c) "Treasury stock reduces stockholders equity." Do you agree? Explain briefly.
The stockholders' equity accounts of Nijhum and Company Limited on January 1, 2021, were as follows. Preferred Stock (8%, Tk. 50 par, 10,000 shares authorized) Tk. 4, 00,000 Common Stock (Tk. 1 stated value, 2,000,000 shares authorized) 10, 00,000 Paid-in Capital in Excess of Par-Preferred Stock 1, 00,000 Paid-in Capital in Excess of Stated Value-Common Stock 14, 50,000 Retained Earnings 18, 00,000 During 2021, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 25,000 shares of common stock for Tk. 125,000. Apr. 14 Purchased 6,000 shares of treasury stock-common for Tk. 30,000. Sept. 3 Issued 5,000 shares of common stock for a patent valued at Tk. 40,000. Oct. 5 Sold 2,000 shares of treasury stock - common for Tk. 15,000. Nov. 10 Sold 1,000 shares of common stock for the treasury at a cost of Tk. 2,000. Dec. 31 Determined that net income for the year was Tk. 5, 00,000. No dividends were declared during the year. Required: a) Journalize the transactions and the closing entry for net income. b) Prepare a stockholders' equity section at December 31, 2021. c) "Treasury stock reduces stockholders equity." Do you agree? Explain briefly.
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:James A. Heintz, Robert W. Parry
Chapter20: Corporations: Organization And Capital Stock
Section: Chapter Questions
Problem 1MP: Stockholders equity accounts and other related accounts of Gonzales Company as of January 1, 20--,...
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Transcribed Image Text:The stockholders' equity accounts of Nijhum and Company Limited on January 1, 2021, were as follows.
Preferred Stock (8%, Tk. 50 par, 10,000 shares authorized)
Tk. 4, 00,000
Common Stock (Tk. 1 stated value, 2,000,000 shares authorized)
10, 00,000
Paid-in Capital in Excess of Par-Preferred Stock
1, 00,000
Paid-in Capital in Excess of Stated Value-Common Stock
14, 50,000
Retained Earnings
18, 00,000
During 2021, the corporation had the following transactions and events pertaining to its stockholders'
equity.
Feb. 1 Issued 25,000 shares of common stock for Tk. 125,000.
Apr. 14 Purchased 6,000 shares of treasury stock-common for Tk. 30,000.
Sept. 3 Issued 5,000 shares of common stock for a patent valued at Tk. 40,000.
Oct. 5 Sold 2,000 shares of treasury stock - common for Tk. 15,000.
Nov. 10 Sold 1,000 shares of common stock for the treasury at a cost of Tk. 2,000.
Dec. 31 Determined that net income for the year was Tk. 5, 00,000.
No dividends were declared during the year.
Required:
a) Journalize the transactions and the closing entry for net income.
b) Prepare a stockholders' equity section at December 31, 2021.
c) "Treasury stock reduces stockholders equity." Do you agree? Explain briefly.
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