There are some owners who are desirous about comparing many financial transactions and possible outcomes to assist in their decision-making process. These individuals assumes that the business will be formed around January 1st, 2019, and that Hraesvelgr Company’s charter will authorize about 1000000 shares of common stock and 400000, $100 par value, 5% cumulative preferred stock. Issued 15000 shares of common stock. Stock has par value of $0.10 per share and was issued at $30 per share. Issued 5000 shares of preferred stock at par value as payment in exchange for legal services. Exchanged 120,000 shares of common stock for land with an appraised value of $300,000 and a building with an appraised value of $500,000. Earned Net Income $600,000 Paid dividends to preferred shareholders as well as $2 per share to common stockholders. Answer the following questions: Prepare the journal entries with narrations to record the following: insurances of stock, close out net income to retained earnings, dividend paid and close out dividend to retained earnings. Prepared Hraesvelgr Company’s Stockholders Equity Section of the Balance Sheet at December 31st 2019. It must contain the following: information on par values, the number of shares authorized and issued where necessary, the sub total for the total paid in capital, Retained earnings and total stockholders’ equity.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 81PSA

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There are some owners who are desirous about comparing many financial transactions and possible outcomes to assist in their decision-making process. These individuals assumes that the business will be formed around January 1st, 2019, and that Hraesvelgr Company’s charter will authorize about 1000000 shares of common stock and 400000, $100 par value, 5% cumulative preferred stock.

Issued 15000 shares of common stock. Stock has par value of $0.10 per share and was issued at $30 per share.
Issued 5000 shares of preferred stock at par value as payment in exchange for legal services.
Exchanged 120,000 shares of common stock for land with an appraised value of $300,000 and a building with an appraised value of $500,000.
Earned Net Income $600,000
Paid dividends to preferred shareholders as well as $2 per share to common stockholders.

Answer the following questions:

Prepare the journal entries with narrations to record the following: insurances of stock, close out net income to retained earnings, dividend paid and close out dividend to retained earnings.

Prepared Hraesvelgr Company’s Stockholders Equity Section of the Balance Sheet at December 31st 2019. It must contain the following: information on par values, the number of shares authorized and issued where necessary, the sub total for the total paid in capital, Retained earnings and total stockholders’ equity.

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