The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were

Question

The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as follows.

Preferred Stock (8%, $49 par, cumulative, 10,800 shares authorized) $ 392,000 Common Stock ($1 stated value, 2,054,700 shares authorized) 1,000,200 Paid-in Capital in Excess of Par—Preferred Stock 132,400 Paid-in Capital in Excess of Stated Value—Common Stock 1,473,800 Retained Earnings 1,787,700 Treasury Stock (10,100 common shares) 40,400

During 2015, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb. 1 Issued 24,700 shares of common stock for $122,300.

Apr. 14 Sold 5,800 shares of treasury stock—common for $33,400.

Sept. 3 Issued 4,900 shares of common stock for a patent valued at $35,800.

Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $5,800.

Dec. 31 Determined that net income for the year was $468,000.

No dividends were declared during the year.

(a) Journalize the transactions and the closing entry for net income.

Explanation / Answer

Journal Entries

Feb 1

Cash A/c Dr. $122300

To Common Stock A/c Cr. $ 24700

To  Paid-in Capital in Excess of Stated Value—Common Stock A/c Cr.$ 97600

April 14

Treasury stock => 40400 / 10100 =>$4 per share

Cash A/c Dr. $33400

To tresury Stcok A/c Cr. $23200

To Paid in capital in from sale of treasury stock A/c Cr. $10200

Sep 3

Patent A/c Dr. $35800

To Common Stock A/c Cr. $4900

To  Paid-in Capital in Excess of Stated Value—Common Stock A/c Cr. $30900

Nov 10

Treasury Stock A/c Dr. $5800

To Cash A/c cr. $5800

Dec 31

Income Summary A/c Dr. $468000

To Retained Earnings A/c Cr. $468000

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