Tarrant Corporation was organized this year to operate a financial consulting bu

Question

Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, par value $12 per share, 13,400 shares authorized. During the year, the following selected transactions were completed: a. Sold and issued 6,300 shares of common stock for cash at $24 per share. b. Sold and issued 2,400 shares of common stock for cash at $29 per share. c. At year-end, the accounts reflected income of $7,400. No dividends were declared.

1. Prepare the journal entries required to record the sale of common stock in (a) and (b). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the stockholders’ equity section as it should be reported on the year-end balance sheet.

Explanation / Answer

Journal Entries Particulars Debit Credit 1.a) Cash $        151,200 Common Stock $    75,600 =6300*12 Security Premium $    75,600 1.b) Cash $          69,600 Common Stock $    28,800 =2400*12 Security Premium $    40,800 2.) Stock Holders' Equity Issued and subscribed 8700 Equity Shares @$12 par value. $ 104,400 Security Premium $ 116,400 Retained Earnings $      7,400 Closing Stock Holders' Equity $ 228,200

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