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. 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 Frederick Mining Company Equity Section of Balance Sheet as of December 31, 2016 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 Frederick Mining Company Equity Section of Balance Sheet as of December 31, 2016

Explanation / Answer

Frederick Mining Company All Amounts in $ Journal Entries Debit Credit 28/01/2016 Retained Earnings A/c 500000 To Loan A/c 500000 15/02/2016 Dividends on Common Stock A/c 180000 To Dividends Payable A/c 180000 31/03/2016 Dividends Payable A/c 180000 To Cash A/c 180000 22/07/2016 Stock Dividends A/c 588000 To Stock Dividend Payable A/c 588000 15/08/2016 Stock Dividend Payable A/c 588000 To Common Stock A/c 120000 To Paid-up Capital in excess of Par A/c 468000 18/09/2016 Common Stock A/c 50000 Paid-up Capital in excess of Par A/c 210000 To Treasury Stock A/c 260000 31/12/2016 Debit Credit Sales revenue 6890000 Cost of goods sold 4752600 Administrative salary expense 436500 Office expense 118560 Depreciation expense 12000 Transportation expense 18400 Interest expense 82800 5420860 Net Income for the year 1469140 Net Income A/c 1469140 To Retained Earnings A/c 1469140 Retained Earnings A/c 768000 To Dividends on Common Stock A/c 180000 To Stock Dividends A/c 588000 Frederick Mining Company Equity Section of Balance Sheet as of December 31, 2016 Common stock, $10 par value, 200,000 shares authorized    132,000 shares issued 1320000 Paid-in capital in excess of par value 4179250 Less : Treasury Stock -260000 Retained earnings 5352395    Total equity 10591645

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