GL1301-Based on Problem 13-2A LO C3, P2, P3 Stream Launch Company reports the fo
ID: 2559685 • Letter: G
Question
GL1301-Based on Problem 13-2A LO C3, P2, P3 Stream Launch Company reports the following components of stockholders' equity on December 31, 2016: Common stock-$10 par value, 130, 000 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 500,000 75,000 410,000 $985,000 In year 2017, the following transactions affected its stockholders' equity accounts. Jan. Jan. 1 Purchased 5,000 shares of its own stock at $23 cash per share. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record Feb. 28 Paid the dividend declared on January 5. July 6 Sold 1,900 of its treasury shares at $27 cash per share. Aug. 22 Sold 3,100 of its treasury shares at $20 cash per share. Sept. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record. Oct. 28 Paid the dividend declared on September 5. Dec. 31 Closed the $164,500 credit balance (fron net income) in the Income Summary account to Retained Earninga tockholdersImpact on Requirement Journal Trial Balance Statement of S Ledger Equity RE EquityExplanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Jan Treasury Stock Dr. 115,000 5,000 Shares X $23 To Cash 115,000 (Record the Purchase of treasury Stock) 5-Jan Retained Earnings Dr. 90,000 45,000 Shares X $2 To Cash Dividends Payable 90,000 (Record the cash dividend declared) 28-Feb Cash Dividends Payable Dr. 90,000 To Cash 90,000 (record the dividends paid) 6-Jul Cash Dr. 51,300 1,900 Shares X $27 To Treasury Stock 43,700 1,900 Shares X $23 To Paid in Capital in excess of par - Treasury 7,600 1,900 Shares X $4 (Record the sale of Treasury Stock) 22-Aug Cash Dr. 62,000 3,100 Shares x $20 Paid in Capital in excess of par - Treasury Dr. 7,600 Retained Earnings Dr. 1,700 $71,300 - ($62,000 + $7,600) To Treasury Stock 71,300 3,100 Shares x $23 (Record the sale of Treasury Stock) 5-Sep Retained Earnings Dr. 100,000 50,000 Shares X $2 To Cash Dividends Payable 100,000 (Record the cash dividend declared) 28-Oct Cash Dividends Payable Dr. 100,000 To Cash 100,000 (record the dividends paid) 31-Dec Income Summary Dr. 164,500 To Retained Earnings 164,500 (Record the Net Income Earned) Answer 2. Stream Launch Company Statement of Retained Earnings As on Dec 31, 2017 Beginning Balance - Jan 1, 2017 410,000.00 Less: Cash Dividends Declared - Jan-5 (90,000.00) Less: Cash Dividends Declared - Sep-5 (100,000.00) Sub-total 220,000.00 Less: Loss on Sale of Treasury Stock (1,700.00) Sub-total 218,300.00 Add: Net Income 164,500.00 Ending Balance - Dec 31, 2017 382,800.00 Answer 3. Stream Launch Company Balance Sheet (Partial) As on Dec 31, 2017 Stockholders' Equity Paid-in Capital: Common Stock - $10 Par Value, 130,000 Shares Authorized, 50,000 Shares issued & Outstanding 500,000.00 Paid in Capital in Excess of Par - Common 75,000.00 Total Paid in Capital 575,000.00 Retained Earnings 382,800.00 Total Stockholders' Equity 957,800.00 Answer 4. Statement of Stockholders' Equity Date Common Stock Paid in Capital in Excess of Par Retained Earnings Treasury Stock Total Common Treasury 1-Jan Beginning Balance 500,000.00 75,000.00 - 410,000.00 - 985,000.00 1-Jan Purch of treasury Stock - - - (115,000.00) (115,000.00) 5-Jan Declaration of Dividends - - - (90,000.00) - (90,000.00) 6-Jul Sale of tresury Stock - - 7,600.00 - 43,700.00 51,300.00 22-Aug Sale of tresury Stock (7,600.00) (1,700.00) 71,300.00 62,000.00 5-Sep Declaration of Dividends - - - (100,000.00) - (100,000.00) 31-Dec Net Income Earned 164,500.00 164,500.00 31-Dec Ending Balance 500,000.00 75,000.00 - 382,800.00 - 957,800.00
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