Hawkins Laboratory International Corporation (Hawkins\"O has recently asked you
ID: 2513024 • Letter: H
Question
Hawkins Laboratory International Corporation (Hawkins"O has recently asked you to design and mplement an accounting system in Excel that separately maintains its stockholders equity accounts. Hawkins has two classes of shares: 1) 5% preferred with a $10 par value, and 2) common with a $1 par value. While this sounds like a big, complicated job, you readily accepted its offer to pay you $400,000 for your hard work To begin, you first asked Hawkins' CFO, Mrs. Wheeler for electronic copies of all general ledger entries pertaining to stockholders' equity to date, plus all previous Statements of Shareholders Equity to date. Mrs. Wheeler informed you that literally all of Hawkins books and records were recently destroyed in an unfortunate office fire. The only piece of information she was able to provide was a paper copy of Hawkins Statement of Shareholders Equity for 2015, and 2016 Mrs. Wheeler was able to recall the following transactions that occurred during 2017: 1/1/17: Issued 400,000 shares of common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares. 1/1/17: Issued 500,000 shares of its preferred stock at $40 per share. The shares were privately placed and Hawkins did not pay share issue costs 3/1/17: Purchased 220,000 shares of common stock at $35 per share 6/30/17: Declared a $450,000 dividend for the first half of the year. 7/1/17: Sold 105,000 of the treasury shares at $44 per share (the company uses the FIFO method when determining par value of sold treasury shares) 7/15/17: Paid the cash dividend 9/1/17: Declared a distributed a property dividend of shares of stock in Byers Corp. Hawkins purchased 3,570,000 shares of Byers Corp in 2016 for $28.560 000. On 9/1/17 shares of Byers Corp, were trading at S1 50 per share. 12/31/17: Hawkins reported net income of $5.325,691 (which includes the effects of any transactions listed above.Explanation / Answer
Journal entries to establish beginning balances for each of the shareholders equity account as of 1/1/2015
Bank A/c Dr
To common stock A/c
To Additional paid up capital A/c
(Being journal entry passed for the issuance of shares and additional paid up capital)
10,769,000
354,000
10,415,000
Income A/c Dr.
To Retained Earnings
(Being income earned and retained as eanings)
2,761,044
(2) Journal entry for events and transactions that affected Stockholders Equity during 2015 and 2016
Bank A/c Dr.
To common stock A/c
To Additional Paid up Capital A/c
(Being common Stock and additional paid up capital issued)
12580000
370000
12,210,000
Treasury Stock A/c Dr.
To Cash A/c
(Being 83500 shares repurchase @20 )
1670000
1670000
Dividend A/c Dr.
To Cash A/c
(Being cash dividend distributed)
50000
50000
Dividend A/c Dr.
To cash A/c
(Being cash dividend distributed)
75000
75000
Journal entry for the events Mrs Wheeler recalled from 2017
1/1/17
Bank A/c Dr
To common stock A/c
(Being common stock issued)
12,400,000
12,400,000
Underwriting commission A/c Dr.
To Bank A/c
(Being commission fees paid)
372000
372000
Bank A/c Dr.
To Preferred Stock A/c
(Being preferred stock issued)
20,000,000
20,000,000
3/1/17
Treasure stock A/c Dr,
To cash A/c
(Being shares repurchased)
7,700,000
7,700,000
6/30/17
No entry (as dividend is declared not distributed)
7/1/17
Bank A/c Dr.
To Treasury Stock
(Being treasury stock sold, 105000 shares @ 44)
4,620,000
4,620,000
Dividend A/c Dr.
To cash A/c
(Being cash dividend distributed as declared before)
450000
450000
Byers corp A/c (3570000*1.5) Dr
Premium paid on shared purchased A/C (3570000*6.5) Dr.
To cash (3570000* 8)
(being byers corp purchased at premium)
5355000
23205000
income a.c dr.
to retained earning a/c
(being retained earning earned)
5325691
5325691
date Particulars Amount (Dr.) Amount(Cr.) Jan 2015Bank A/c Dr
To common stock A/c
To Additional paid up capital A/c
(Being journal entry passed for the issuance of shares and additional paid up capital)
10,769,000
354,000
10,415,000
Income A/c Dr.
To Retained Earnings
(Being income earned and retained as eanings)
2,761,044
2,761,044Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.