Prince Dell, Inc., was organized in 2016. At December 31, 2016, the Prince Dell
ID: 2559115 • Letter: P
Question
Prince Dell, Inc., was organized in 2016. At December 31, 2016, the Prince Dell
balance sheet reported the following stockholders’ equity:
Prince Dell Inc.
Stockholders’ Equity
December 31,2016
Paid-in Captital
Preferred stock, 4%, $55 par, 650,000 shares authorized, none issued
$ 0
Common stock, $2 par, 540,000 shares authorized, 62,000 shares issued and outstanding
124,000
Paid-in capital in excess of par—common
42,000
Total paid-in capital
166,000
Retained earnings
28,000
Total Stockholders’ equity
$194,000
Requirements:
1. During 2017, the company completed the following selected transactions.
Journalize each transaction. Explanations are not required.
a. Issued for cash 1,500 shares of preferred stock at par value.
b. Issued for cash 2,000 shares of common stock at a price of $7 per share.
c. Net income for the year was $78,000, and the company declared no dividends.
Make the closing entry for net income.
2. Prepare the stockholders’ equity section of the Prince Dell balance sheet at
December 31, 2017.
Prince Dell Inc.
Stockholders’ Equity
December 31,2016
Paid-in Captital
Preferred stock, 4%, $55 par, 650,000 shares authorized, none issued
$ 0
Common stock, $2 par, 540,000 shares authorized, 62,000 shares issued and outstanding
124,000
Paid-in capital in excess of par—common
42,000
Total paid-in capital
166,000
Retained earnings
28,000
Total Stockholders’ equity
$194,000
Explanation / Answer
Date Accounting titles & Explanations Debit Credit a) Cash 82500 Preferred Stock (1500*55) 82,500 b) Cash 14,000 Common Stock (2000*2) 4000 paid in Capital in excess of par 10000 c) income summary 78,000 Retained earnings 78,000 Prince Dell inc Stockholder's Equity paid in capital preferred stock ,4%,$55par,650,000shares authorized ,1500 issued 82,500 Common stock,$2 par,540,000 shares authorized ,64,000 shares issued and outstanding 128000 paid in capital in excess of par-common 52000 total paid in capital 262,500 Retained earnings 106000 total Stockholder's Equity 262,500
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