Need help answering the questions Cash 24,000 Accounts Receivable 39,000 Invento

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Need help answering the questions

Cash                                         24,000

Accounts Receivable                 39,000              Inventory                     45,000

            Supplies                                   10,000              Equipment                   308,000

            Accum. Depreciation                 61,500              Accounts Payable          21,000

            Wages Payable                          2,200              LT Note Payable           40,000

            Common Stock                         40,000              Retained Earnings         261,300

            Sales Revenue                         840,000              Cost of Goods Sold       500,000

            Depreciation Expense                28,500              Wages Expense             125,600

            Other Expenses                        155,000              Supplies Expense          14,000

            Loss on Sale of Eq.                   2,000

The $40,000 common stock balance relates to the owner’s original investment of cash to start the company. Assume the stock has a par value of $4 per stock, how many shares of common stock was the owner originally issued?

The owner has decided to “take the company public” by issuing more stock to the public. The following transactions relating to the equity accounts occurred during the year ending March 31, 2017. Write the journal entries for the transactions below.

The company issued 20,000 shares of common stock for $12 a share.

The company issued 2,000 shares of 5% Preferred Stock at $100 par value.

The company purchased back 50 shares of its common stock for $10 a share. (Treasury Stock).

Dividends were declared for common stock holders in the amount of $2 per share. Remember to calculate the number of shares OUTSANDING (issued minus treasury).

The expected dividend for the preferred stock was declared.

The declared Dividends were paid from cash to both common and preferred stockholders.

Use the T accounts below. Include the “previous” balances from Packet 4 as the beginning for this Scenario. Post your Journal entries from above.

Cash

Common Stock

Additional Paid in Capital

Treasury Stock

Preferred Stock

Retained Earnings

Dividend Payable

-0-

248,000

Determine the “ending” balances for the accounts above Wholesale Workers Company as of March 31, 2017.

Cash

Common Stock

Additional Paid in Capital

Treasury Stock

Preferred Stock

Retained Earnings

Dividend Payable

-0-

248,000

Explanation / Answer

Solution :

Number of shares of common stock originally issued by owner = $40,000 / $4 = 10000 shares

Wholesale Workers Company - Journal Entries Event Particulars Debit Credit 1 Cash A/c Dr (20000*12) $240,000.00            To Common Stock (20000* $4) $80,000.00            To Additional Paid in Capital (20000*$8) $160,000.00 (Being 20000 common share issued at $12 per share) 2 Cash A/c Dr (2000*100) $200,000.00            To 5% Preferred Stock $200,000.00 (Being 20000 preferred share issued at $100 per share) 3 Treasury Stock Dr (50*$10) $500.00            To Cash $500.00 (Being 50 common share purchased at $10 per share) 4 Retained Earnings Dr [(10000+20000 - 50)*$2] $59,900.00            To Dividend Payable $59,900.00 (Being dividend declared on common shares) 5 Retained Earnings Dr ($200,000*5%) $10,000.00            To Dividend Payable $10,000.00 (Being dividend declared on preferred stock) 6 Dividend Payable Dr $69,900.00            To Cash $69,900.00 (Being dividend paid on common shares and preferred stock)

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