Question :Hi the question as it is from book of accounting page 629 ( financial

Question

Question :Hi the question as it is from book of accounting page 629 ( financial accounting tools for business descion making kimmel) problem  11-3A

Problem 11-3A

largent Corporation, a publicly traded company, is authorized to issue 200,000 $4 cumulative preferred shares and an unlimited number of common shares. On January 1, 2018, the general ledger contained the following shareholders’ equity accounts:

The following equity transactions occurred in 2018:

(a)

Record the above transactions, including any entries required to close dividends and net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round average cost per share to 2 decimal palces, e.g. 2.25 and final answers to 0 decimal places.)

(b) Open T accounts and post to the shareholders’ equity accounts. (Record entries in the order presented in the problem.)

(c)Prepare the statement of changes in equity for the year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(d)Prepare the shareholders’ equity section of the statement of financial position at December 31. (Enter account name only and do not provide descriptive information.)

Preferred shares (8,000 shares issued) $440,000 Common shares (70,000 shares issued) 1,050,000 Contributed surplus 25,000 Retained earnings 800,000 Accumulated other comprehensive income 10,000

Explanation / Answer

(a) Date Account titles Debit Credit Feb. 6 Cash 600000 Preferred shares (10000*55) 550000 Contributed surplus 50000 (Issue of preferred stock) Apr. 6 Cash 570000 Common stock (20000*15) 300000 Contributed surplus 270000 (Issue of common stock) Apr. 27 Common stock (3000*15) 45000 Contributed surplus 6000 Cash (3000*17) 51000 (Reacquired and retired common shares ) May. 29 Preferred dividend (18000*4*1/2) 36000 Preferred dividend payable 36000 (Preferred dividend declared) July 1. Preferred dividend payable 36000 Cash 36000 (Preferred dividend paid) Aug. 22 Building 165000 Common stock (9000*15) 135000 Contributed surplus 30000 (Issued 9,000 common shares in exchange for a building) Dec. 14 No entry Dec. 31 Retained earnings 36000 Preferred dividend 36000 (Closure of dividend) Dec. 31 Income summary 582000 Retained earnings 582000 (Closure of net income) Note: Par value of preferred shares=440000/8000=$ 55 per share Par value of common shares=1050000/70000=$ 15 per share (b) Preferred shares Date Account titles Debit Date Account titles Credit Jan.1 Balance 444000 Dec 31. Balance 694000 Feb 6. Cash 550000 694000 994000 Common shares Date Account titles Debit Date Account titles Credit Apr. 27 Cash 45000 Jan.1 Balance 1050000 Dec. 31 Balance 1440000 Apr. 6 Cash 300000 Aug. 22 Building 135000 1485000 1485000 Contributed surplus Date Account titles Debit Date Account titles Credit Apr. 27 Cash 6000 Jan.1 Balance 25000 Feb 6. Cash 50000 Dec. 31 Balance 369000 Apr. 6 Cash 270000 Aug. 22 Building 30000 375000 375000 Retained earnings Date Account titles Debit Date Account titles Credit Dec. 31 Preferred dividend 36000 Jan.1 Balance 800000 Dec. 31 Net income 582000 Dec. 31 Balance 1346000 1382000 1382000 c) Statement of changes in equity Common stock Preferred common stock Contributed surplus Retained earnings Accumulated other comprehensive income Balance at January 1 1050000 440000 25000 800000 10000 Changes in equity for the year: Issue of preferred stock 550000 50000 Issue of common stock for cash 300000 270000 Reacquired and retired common shares -45000 -6000 Dividend paid -36000 Issue of common stock in exchange of building 135000 30000 Income for the year 582000 Balance at December 31 1440000 990000 369000 1346000 10000 d) Shareholder's equity section Preferred shares $990,000 Common shares 1,440,000 Contributed surplus 369,000 Retained earnings 1,346,000 Accumulated other comprehensive income 10,000 $4,155,000

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.