Choctaw Co. completed the following transactions in 2018, the first year of oper

Question

Choctaw Co. completed the following transactions in 2018, the first year of operation: 1. Issued 26,000 shares of $15 par common stock for $15 per share. 2. Issued 3,600 shares of $25 stated value preferred stock for $25 per share. 3. Purchased 1,600 shares of common stock as treasury stock for $17 per share. 4. Declared a $2,600 cash dividend on preferred stock. 5. Sold 1,000 shares of treasury stock for $19 per share. 6. Paid $2,600 cash for the preferred dividend declared in Event 4. 7. Earned cash revenues of $90,000 and incurred cash expenses of $47,000. 8. Appropriated $8,600 of retained earnings. Required a. Organize the transaction in accounts under an accounting equation b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2018.

Explanation / Answer

Solution a:

Solution b:

Choctaw Co Accounting Equation for the year 2018 Event Assets = Liabilities Stockholder's Equity Cash = Dividends Payable + Preferred Stock Common Stock + Paid in capital in excess treasury stock - Treasury Stock + Retained Earnings + Appropriated Retained Earnings Accounting Title retained Earnings 1 $390,000.00 $390,000.00 2 $90,000.00 $90,000.00 3 -$27,200.00 $27,200.00 4 $2,600.00 -$2,600.00 Dividends 5 $19,000.00 $2,000.00 -$17,000.00 6 -$2,600.00 -$2,600.00 7a $90,000.00 $90,000.00 Revenue 7b -$47,000.00 -$47,000.00 Expenses 8 -$8,600.00 $8,600.00 Totals $512,200.00 $0.00 $90,000.00 $390,000.00 $2,000.00 $10,200.00 $31,800.00 $8,600.00

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