There are two problems this week covering the equity section of the balance shee

Question

There are two problems this week covering the equity section of the balance sheet. Click the tab at the bottom of the screen when you are ready for problem 2. The stockholders equity section of the balance sheet of Frederick Mining Company is as follows: Frederick Mining Company Equity Section of Balance Sheet as of January 1, 2016 Common stock, $10 par value, 200,000 shares authorized    120,000 shares issued                   1,200,000 Paid-in capital in excess of par value                   3,711,250 Retained earnings                   4,651,255    Total equity                   9,562,505 Create a journal entry (if needed) for each of the following items.   Prepare an updated equity section of the balance sheet as of December 31, 2016. Scroll down past the journal entry section to see the heading for this. 1/28/2016 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 2/15/2016 Frederick Mining board of directors declares a $1.50-per-share dividend payable on 3/31/2016 to shareholders of record as of 3/15/2016. Frederick uses a dividends account to record dividends declared. 3/31/2016 Cash dividend declared on 2/15/2016 is paid. 7/22/2016 Frederick Mining board of directors declares a 10% stock dividend to be paid 8/15/2016 to shareholders of record as of 8/1/2016. The market value of the stock is $49 immediately prior to the declaration. 8/15/2016 Stock dividend declared on 7/22/16 is paid. 9/18/2016 Frederick Mining buys back 5,000 shares of company stock on the open market for $52 per share. The purchased shares are not retired but are held in treasury. 12/31/2016 Frederick Mining had the following income and expense account balance as of 12/31/2016. Close out income. Debit Credit Sales revenue                    6,890,000 Cost of goods sold                   4,752,600 Administrative salary expense                       436,500 Office expense                       118,560 Depreciation expense                         12,000 Transportation expense                         18,400 Interest expense                         82,800 12/31/2016 Close out dividends. Journal Entries Debit Credit There are two problems this week covering the equity section of the balance sheet. Click the tab at the bottom of the screen when you are ready for problem 2. The stockholders equity section of the balance sheet of Frederick Mining Company is as follows: Frederick Mining Company Equity Section of Balance Sheet as of January 1, 2016 Common stock, $10 par value, 200,000 shares authorized    120,000 shares issued                   1,200,000 Paid-in capital in excess of par value                   3,711,250 Retained earnings                   4,651,255    Total equity                   9,562,505 Create a journal entry (if needed) for each of the following items.   Prepare an updated equity section of the balance sheet as of December 31, 2016. Scroll down past the journal entry section to see the heading for this. 1/28/2016 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 2/15/2016 Frederick Mining board of directors declares a $1.50-per-share dividend payable on 3/31/2016 to shareholders of record as of 3/15/2016. Frederick uses a dividends account to record dividends declared. 3/31/2016 Cash dividend declared on 2/15/2016 is paid. 7/22/2016 Frederick Mining board of directors declares a 10% stock dividend to be paid 8/15/2016 to shareholders of record as of 8/1/2016. The market value of the stock is $49 immediately prior to the declaration. 8/15/2016 Stock dividend declared on 7/22/16 is paid. 9/18/2016 Frederick Mining buys back 5,000 shares of company stock on the open market for $52 per share. The purchased shares are not retired but are held in treasury. 12/31/2016 Frederick Mining had the following income and expense account balance as of 12/31/2016. Close out income. Debit Credit Sales revenue                    6,890,000 Cost of goods sold                   4,752,600 Administrative salary expense                       436,500 Office expense                       118,560 Depreciation expense                         12,000 Transportation expense                         18,400 Interest expense                         82,800 12/31/2016 Close out dividends. Journal Entries Debit Credit There are two problems this week covering the equity section of the balance sheet. Click the tab at the bottom of the screen when you are ready for problem 2. The stockholders equity section of the balance sheet of Frederick Mining Company is as follows: Frederick Mining Company Equity Section of Balance Sheet as of January 1, 2016 Common stock, $10 par value, 200,000 shares authorized    120,000 shares issued                   1,200,000 Paid-in capital in excess of par value                   3,711,250 Retained earnings                   4,651,255    Total equity                   9,562,505 Create a journal entry (if needed) for each of the following items.   Prepare an updated equity section of the balance sheet as of December 31, 2016. Scroll down past the journal entry section to see the heading for this. 1/28/2016 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 2/15/2016 Frederick Mining board of directors declares a $1.50-per-share dividend payable on 3/31/2016 to shareholders of record as of 3/15/2016. Frederick uses a dividends account to record dividends declared. 3/31/2016 Cash dividend declared on 2/15/2016 is paid. 7/22/2016 Frederick Mining board of directors declares a 10% stock dividend to be paid 8/15/2016 to shareholders of record as of 8/1/2016. The market value of the stock is $49 immediately prior to the declaration. 8/15/2016 Stock dividend declared on 7/22/16 is paid. 9/18/2016 Frederick Mining buys back 5,000 shares of company stock on the open market for $52 per share. The purchased shares are not retired but are held in treasury. 12/31/2016 Frederick Mining had the following income and expense account balance as of 12/31/2016. Close out income. Debit Credit Sales revenue                    6,890,000 Cost of goods sold                   4,752,600 Administrative salary expense                       436,500 Office expense                       118,560 Depreciation expense                         12,000 Transportation expense                         18,400 Interest expense                         82,800 12/31/2016 Close out dividends. Journal Entries Debit Credit There are two problems this week covering the equity section of the balance sheet. Click the tab at the bottom of the screen when you are ready for problem 2. The stockholders equity section of the balance sheet of Frederick Mining Company is as follows: Frederick Mining Company Equity Section of Balance Sheet as of January 1, 2016 Common stock, $10 par value, 200,000 shares authorized    120,000 shares issued                   1,200,000 Paid-in capital in excess of par value                   3,711,250 Retained earnings                   4,651,255    Total equity                   9,562,505 Create a journal entry (if needed) for each of the following items.   Prepare an updated equity section of the balance sheet as of December 31, 2016. Scroll down past the journal entry section to see the heading for this. 1/28/2016 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 2/15/2016 Frederick Mining board of directors declares a $1.50-per-share dividend payable on 3/31/2016 to shareholders of record as of 3/15/2016. Frederick uses a dividends account to record dividends declared. 3/31/2016 Cash dividend declared on 2/15/2016 is paid. 7/22/2016 Frederick Mining board of directors declares a 10% stock dividend to be paid 8/15/2016 to shareholders of record as of 8/1/2016. The market value of the stock is $49 immediately prior to the declaration. 8/15/2016 Stock dividend declared on 7/22/16 is paid. 9/18/2016 Frederick Mining buys back 5,000 shares of company stock on the open market for $52 per share. The purchased shares are not retired but are held in treasury. 12/31/2016 Frederick Mining had the following income and expense account balance as of 12/31/2016. Close out income. Debit Credit Sales revenue                    6,890,000 Cost of goods sold                   4,752,600 Administrative salary expense                       436,500 Office expense                       118,560 Depreciation expense                         12,000 Transportation expense                         18,400 Interest expense                         82,800 12/31/2016 Close out dividends. Journal Entries Debit Credit

Explanation / Answer

Answer :

Journal Entries

Sl No. Date Account Debit Credit

1. 1/28/2016 Loan a/c 500000

Retaind Earnings 500000

2. 3/31/2016 Retained earing 180000

Cash 180000

   ( dividend @ $ 1.5 paid)

3. 9/18/2016 Treasury Stock 260000

   Cash 26000

(5000 common stock buy back @ $ 52)

* Market Price of shares is not given so Stock dividend adjustment & journal entry is not not possible.   

Common Stock Common Stock, $ 10 par value 200000 Share Authorized 120000 Share Issued 1200000 Paid in capital in excess of par Value 3711250 Treasury Stock 5000*52 -260000 Retained earning 5440395 Total Equity 10091645 Working Notes Calculation of Retained Earning O/B of Retained earning 4651255 Add Income of 2016 1469140 Total 6120395 Less Bank Loan Paid 500000 Dividend Paid 120000*1.5 180000 C/B of Retained earning 5440395

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