Assistance Needed with Accounting. Stockholders Equity Transactions, Journal Ent

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Assistance Needed with Accounting.

Stockholders Equity Transactions, Journal Entries, and T-Accounts The stockholders' equity of Fremantle Corporation at January 1 follows 8 Percent preferred stock, $100 par value, 20,000 shares authorized; 4,000 shares issued and outstanding $400,000 Common stock, $1 par value, 100,000 shares authorized; 40,000 shares issued and outstanding Paid-in capital in excess of par value-Preferred stock Paid-in capital in excess of par value-Common stock Retained earnings 40,000 200,000 800,000 550,000 $1,990,000 Total Stockholders' Equity The following transactions, among others, occurred during the year: Jan. 1 Announced a 2-for-1 common stock split, reducing the par value of the common stock to $0.50 per share. Converted $80,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 125 Mar. 31 shares of common stock. 1 Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock. 1Acquired 10,000 shares of common stock for cash at $20 per share. June Sept. Nov. Dec. 21 Issued 5,000 shares of common stock at $22 cash per share. 28 Sold 1,000 treasury shares at $23 per share. 31 Closed net income of $103,000, to the Retained Earnings account Required a. Set up T-accounts for the stockholders equity accounts as of the beginning of the year and enter the January 1 balances. b. Prepare journal entries for the given transactions and post them to the T-accounts (set up any additional T-accounts needed). Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders' equity accounts.

Explanation / Answer

General Journal

Date Account Titles Debit Credit Jan 1 (Memorandum) Common Stock Split 2 for 1 Mar 31 Bonds Payable 83000 Premium on Bonds Payable 127000              Common Stock(80x125x1) 10000              Paid in Value in excess of par (80x125x20) 200000 June 1 Machine 45000              8% Prefered stock(300x100) 30000               Paid in value in excess of par(300x50) 15000 Sep 1 Treasury Stock(10000x1) 10000 Paid in capital in excess of par(10000x19) 190000               Cash 200000 Nov 21 Cash 120000                Common Stock(5000x1) 5000                Paid in value in excess of par(5000x21) 105000 Dec 28 Cash(1000x23) 23000                Treasury Stock(1000x1) 1000                Paid in capital in excess of par(1000x19) 19000                Profit on sale of shares (1000x3) 3000

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