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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Comprehensive Byrd Company’s Contributed Capital section of its January 1, 2019, balance sheet is as follows:

Chapter 15, Problem 12P, Comprehensive Byrd Companys Contributed Capital section of its January 1, 2019, balance sheet is as , example  1

During 2019, Byrd entered into the following transactions:

Chapter 15, Problem 12P, Comprehensive Byrd Companys Contributed Capital section of its January 1, 2019, balance sheet is as , example  2

Required:

  1. 1. Prepare memorandum and journal entries to record the preceding transactions.
  2. 2. Prepare the Contributed Capital section of Byrd’s December 31, 2019, balance sheet.

1.

To determine

Prepare memorandum entry and journal entries to record the given transactions.

Explanation

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Prepare memorandum entry:

Memorandum entry: On January 4, 2019, the company granted compensatory share options to key executives. The share option plan would be vested at the end of service period of 3 years. The estimated fair value of the options expected to be exercised is $81,000.

Prepare journal entries to record the given transactions:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
2019    
April 23Cash (300×$55) 16,500 
     Preferred Stock, $50 par  15,000
     Additional Paid-in Capital on Preferred     Stock   1,500
 (To record issuance of preferred stock)   
     
June 7Cash (600×$17) 10,200 
     Common Stock, $10 stated value   6,000
     Additional Paid-in Capital on Common     Stock   4,200
 (To record issuance of common stock)   
     
September 21Building  49,850 
    Common Stock, $10 stated value  8,000
     Additional Paid-in Capital on Common     Stock (800×$9)  7,200
     Preferred Stock, $50 par  22,500
     Additional Paid-in Capital on Preferred     Stock (450×$7)  3,150
     Cash   9,000
 (To record issue of common stock and preferred stock for acquisition of building)   
     
October 12Treasury Stock: Common  17,550 
    Cash (900×$19

2.

To determine

Prepare the contribution capital section of Company B’s December 31, 2019, balance sheet.

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