please show all the calcualtions, thanks! The xxx inc. had equity on December 31
ID: 2409033 • Letter: P
Question
please show all the calcualtions, thanks!
The xxx inc. had equity on December 31, 2015, as follows:
Common shares, unlimited shares authorized,
50,000 shares issued $250,000
Retained earnings 200,000
Able Corporation is authorized to issue 100,000 shares of $3 cumulative preferred shares.
The following transactions occurred during 2016:
Jan. 15 Issued 5,000 common shares in exchange for equipment valued at $ 35,000.
Feb. 15 The board of directors declared a 5% share dividend to shareholders of record on March 1, to be distributed on March 20. The shares were selling for $6 a share.
Mar. 20 Issued the share dividend.
Apr. 15 Issued 12,000 preferred shares for cash at $22 per share.
May 1 Declared total cash dividends of $62,000 toshareholders of record on May 20, payable June 1.
June 1 Paid the cash dividend.
Aug. 20 The board decided to split the common shares 4 for 1 effective September 1.
Sept. 1 Share split (4 for 1) executed.
Dec. 31 Earned a net income of $300,000 for the year. Closed the income summary account.
REQUIRED:
1) Journalize the above journal entries.
2) Prepare a statement of changes in equity for2016.
3) Prepare the balance sheet presentation of the equity as at December 31, 2016.
Explanation / Answer
JOURNAL ENTRY Date Account Title Debit Credit Jan.15 Equipment $35,000 Common Shares $25,000 (5000*5) Additional Paid up Capital-Common shares $10,000 (35000-25000) (To record Issue of 5000 shares for $7 per share against equipment) Feb15 Retained Earnings $ 16,500 (0.05*(50000+5000)*$6) Common share dividend distributable $ 13,750 (0.05*(50000+5000)*$5) Additional paid up capital-Common shares $ 2,750 (16500-13750) (To record 5% share dividend declared) March 20 Common share dividend distributable $ 13,750 Common Shares $ 13,750 (To record issue of 2750 common share dividend) 2750 April 15 Cash $ 264,000 (22*12000) Preferred shares $ 36,000 (3*12000) Additional paid in capital-Preferred shares $ 228,000 (To record issue of 12000 preferred shares for $22 per share ) May1 Retained Earnings $62,000 Dividend payable $62,000 (To redord declaration of cash dividend) June1 Dividend payable $62,000 Cash $62,000 (To record payment of dividend) August 20 On August20 a 4-for-1 stock split was declared for the common stockholders of record as of September1. Sep. 1 The stock split resulted in the number of issued and outstanding shares of common shares increasing from 57750=(55,000+2750) shares to 231000 shares." Dec31 Summary Income Account $300,000 Retained earnings $300,000 (To record closure of Summary income account) STATEMENT OF CHANGES IN EQUITY Common Shares Additional paid in capital- common shares Preferred shares Additional paid in capital-preference shares Retained Earnings Beginning balance $250,000 $0 $0 $0 $200,000 Addition during the year: $38,750 $12,750 $ 36,000 $ 228,000 $221,500 Ending Balance $288,750 $12,750 $36,000 $228,000 $421,500 BALANCE SHEET STOCKHOLDERS EQUITY Preferred Stock: Authorised 100000 cumulative preferred shares of $3 each Issued 12000 shares $ 36,000 Common Shares, Unlimited shares authorized Issued Common shares 57750 shares @ $1.25 par $288,750 Additional paid in capital -Prederred shares $228,000 Additional opaid in capital -Common shares $12,750 Retained Earning $421,500 Total Stockholders Equity $ 987,000
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