The stockholders\' equity accounts of Sigma Corporation on January 1, 2010, were
ID: 2387436 • Letter: T
Question
The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $300,000
Common Stock ($5 stated value, 300,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par Value - Preferred Stock 15,000
Paid-in Capital in Excess of Stated Value - Common Stock 480,000
Retained Earnings 688,000
Treasury Stock - Common (5,000 shares) 40,000
During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.
Feb. 1 Issued 5,000 shares of common stock for $30,000.
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.
I have ?journalized my transaction and I don't understand how to close income summary and the amount that debit and credit is incorrect: i got 500,5000 . Futhermore, the accounts and post the journal entries to the stockholders' equity accounts I could not close or i should say are incorrect (some at least). Lastly, my balance sheet is also a mess, can anyone help! Thank you.
Explanation / Answer
Partial Balance Sheet
December 31, 2010
Stockholders’ equity
Paid-in capital
Capital stock
8% Preferred stock, $100
par value, noncumulative,
5,000 shares authorized,
3,000 shares issued and
outstanding.................................................... $ 300,000
Common stock, no-par, $5
stated value, 300,000 shares
authorized, 205,000 shares
issued and 199,000 shares
outstanding.................................................... 1,025,000
Total capital stock.................................. $1,325,000
Additional paid-in capital
In excess of par value—
preferred stock.............................................. 15,000
In excess of stated value—
common stock................................................ 485,000
Total additional paid-in
capital................................................... 500,000
Total paid-in capital............................... 1,825,000
Retained earnings............................................................... 844,500
Total paid-in capital and
retained earnings................................. 2,669,500
Less: Treasury stock (6,000 common
shares) ................................................................. (47,000)
Total stockholders’ equity..................... $2,622,500
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