The stockholders equity section of the balance sheet of Frederick Mining Company

Question

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. 28.01.16 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 15.02.16 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. 31.03.16 Cash dividend declared on 2/15/2016 is paid. 22.07.16 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. 15.08.16 Stock dividend declared on 7/22/16 is paid. 18.09.16 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. 31.12.16 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 31.12.16 Close out dividends. Journal Entries Debit Credit 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. 28.01.16 Frederick Mining enters into a loan-modification agreement with the bank, agreeing to appropriate $500,000 of retained earnings to loan repayment. 15.02.16 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. 31.03.16 Cash dividend declared on 2/15/2016 is paid. 22.07.16 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. 15.08.16 Stock dividend declared on 7/22/16 is paid. 18.09.16 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. 31.12.16 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 31.12.16 Close out dividends. Journal Entries Debit Credit

Explanation / Answer

28.01.2016

Retained earning Dr $ 500,000

Reserve for Bank Loan Cr $ 500,000

15.02.2016

Retained Earnings Dr $180,000

Dividend payable Cr $180,000

31.03.2016

Dividend payable Dr $180,000

Cash Cr $ 180,000

22.07.2016

Retained earnings $ 588,000 ( 120,000 X 10% X 49)

Dividend Payable $ 588,000

15.08.2016

Dividend Payable Dr $ 588,000

Common stock Cr $ 120,000 ( 12,000 X 10)

Paid in capital excess of par value Cr $ 468,000 ( 12,000 X 39)

18.09.2016

Treasury Stock Dr $ 260,000

Cash Cr $ 260,000

31.12.2016

1)

Sales Revenue Dr $ 6,890,000

Income summary Cr $ 6,890,000

2)

Income Summary Dr $ 5,420,860

Cost of goods sold Cr $ 4,752,600

Admin. Salary Cr $ 436,500

Office expenses Cr $ 118,560

Depreciation Expense Cr $ 12,000

Transportation expense Cr $ 18,400

Interest Expense Cr $ 82,800

3)

Income summary Dr $ 1,469,140

Retained Earnings Cr $ 1,469,140

Statement of Equity

Particulars Amount Authorised share capital, 200,000 132,000 shares issued , 127,000shares out standing at $ 10 par value $ 1,320,000 Paid in capital excess par value ( 3,711,250 + 468,000) $ 4,179,250 Retained earnings ( 4,651,255 - 500,000 - 180,000 - 588,000 +1,469,140) $ 4,852,395 Less Treasury Stock - $ 260,000 Total $ 10,091,645

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