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Intermediate Accounting: Reporting...

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

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Included in the December 31, 2018, Jacobi Company balance sheet was the following shareholders’ equity section:

Chapter 16, Problem 15P, Included in the December 31, 2018, Jacobi Company balance sheet was the following shareholders , example  1

The company engaged in the following stock transactions during 2019:

Chapter 16, Problem 15P, Included in the December 31, 2018, Jacobi Company balance sheet was the following shareholders , example  2

Required:

  1. 1. Prepare journal entries to record the preceding transactions.
  2. 2. Prepare the December 31, 2019, shareholders’ equity section (assume that 2019 net income was $270,000).

1.

To determine

Prepare journal entry to record the given transactions.

Explanation

Stockholders’ Equity Section: It is refers to the section of the balance sheet that shows the available balance stockholders’ equity as on reported date at the end of the financial year.

Prepare journal entry to record the given transactions.

DateAccount Titles and explanationDebit ($)Credit ($)
January 4, 2019Dividend payable: Preferred (($6×0.5)×2,000)6,000 
 Dividend payable: Common (1)46,400 
     Cash 52,400
 (To record declaration of preferred and common stock)  
    
January 5, 2019Cash (500×$110)55,000 
      Preferred stock, $100 par 50,000
     Additional paid-in capital on preferred stock 5,000
  ( To record issuance of preferred stock)  
    
January 22, 2019Cash (4,000×$23)92,000 
     Common stock, $5 par 20,000
 

    Additional paid-in capital on common stock

 72,000
  ( To record issuance of common stock)  
    
April 2, 2019Cash (700×$24)16,800 
     Treasury stock (700×$20) 14,000
 

    Additional paid-in capital on treasury stock

 2,800 
  (To record the reissuance of treasury stock)  
    

May 14,

2019

Retained earnings (2)84,250 
 

    Common stock to be distributed

     (3,370×$5)

 16,850
     Additional paid-in capital from stock dividend  67,400
 (To record declaration of stock dividend)  
    
June 4, 2019Retained earnings 7,500 
     Dividends payable: Preferred (3) 7,500
 (To record the declaration of annual per share dividend to the preferred)  
    
August 29, 2019Common stock to be  distributed 16,850 
     Common stock, $5 par  16,850
  (To record the issuance of stock dividend)  
    
July 5, 2019Dividends payable: Preferred stock7,500 
     Cash 7,500
 (To record the amount of dividend paid on preferred stock)  
    
July 20, 2019No entry is required  
    
August 3 ,2019Loss on disposal of investment (500×[$900$400])25,000 
 

    Unrealized decrease in the value of available-for-sale of securities

      (50×[$900$600])

 15,000
 

    Allowance for change in value investment

     (500×[$600$400])

 10,000
 (To record the declaration of property  dividend)  
    
 Reta

2.

To determine

Prepare Company J’s statement of stockholder’s equity section for 2019.

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