The Stockholders’ Equity section of the balance sheet of Willy Corporation on Ja
ID: 2612005 • Letter: T
Question
The Stockholders’ Equity section of the balance sheet of Willy Corporation on January 1, 2016, is shown below; selected transactions for the year follow:
Stockholders’ Equity
Preferred Stock (10% cumulative, $10 par value,
200,000 shares authorized)
Issued and Outstanding, 7,300 Shares
$
73,000
Paid-in Capital in Excess of Par Value
7,300
$
80,300
Common Stock (no-par value, $50 stated value,
130,000 shares authorized)
Issued and Outstanding, 1,300 Shares
65,000
Paid-in Capital in Excess of Stated Value
2,600
67,600
Total Paid-in Capital
$
147,900
Retained Earnings
123,000
Total Stockholders’ Equity
$
270,900
DATE
TRANSACTIONS
Feb.
15
Repurchased 4,200 shares of the outstanding preferred stock for $46,200 in cash. The stock is to be held as treasury stock. State law requires that an amount of retained earnings equal to the cost of treasury stock held must be appropriated. Record the purchase and the appropriation of retained earnings.
Mar.
4
Declared a 2-for-1 stock split of common stock. Each shareholder will own twice as many shares as originally owned. Stated value is reduced to $25 per share. Date of record is March 15. Date of issue of new shares is April 1.
April
1
Issued new shares called for by split.
June
17
Declared semiannual dividend of 5 percent on preferred stock, to be paid on July 12 to holders of record on June 30.
July
12
Paid cash dividend on preferred stock.
Sept.
25
Purchased 400 shares of outstanding preferred stock at $10 per share to be held as treasury stock. Record appropriated retained earnings equal to cost of the treasury stock.
Dec.
15
Declared semiannual cash dividend of 5 percent on preferred stock to be paid on January 12 to holders of record on December 30.
15
Declared cash dividend of $1.10 per share on common stock to be paid on January 12 to holders of record on December 30.
15
Accepted title to a tract of land with an appraised value of $143,000 from the City of Greenville. The tract is to be used as a building site for the corporation’s new factory.
31
Had net income after taxes for the year of $63,000. Give the entry to close the Income Summary account.
2.
Record the transactions in general journal form. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
Record the purchase of treasury stock.
Record the appropriation for treasury stock.
Record the stock split.
Record the issuance of new shares as a result of the stock split.
Record the declaration of the dividend on June 17.
Record the declaration of dividends payable to stockholders of record as of June 30.
Record the payment of the dividend on July 12.
Record the purchase of treasury stock on September 25.
Record the declaration of the dividend on preferred stock on December 15.
Record the declaration of the dividend on common stock on December 15.
Prepare the Stockholders’ Equity section of the balance sheet.
The Stockholders’ Equity section of the balance sheet of Willy Corporation on January 1, 2016, is shown below; selected transactions for the year follow:
Explanation / Answer
2. In the books of Willy Corporation :
3. Willy Corporation
Balance Sheet (Partial)
December 31, 2016
Date Account Titles Debit Credit $ $ Feb 15 Treasury Stock: Preferred 46,200 Cash 46,200 Retained Earnings 46,200 Appropriated Retained Earnings: Treasury Stock 46,200 March 4 No journal entry required April 1 No journal entry required June 17 Retained Earnings 1,550 Dividends Payable : Preferred Stock ( 7,300 - 4,200) x $ 10 x 5%) 1,550 July 12 Dividends Payable : Preferred Stock 1,550 Cash 1,550 Sept 25 Treasury Stock : Preferred 4,000 Cash 4,000 Retained Earnings 4,000 Appropriated Retained Earnings: Treasury Stock 4,000 Dec 15 Retained Earnings 1,350 Dividends Payable: Preferred Stock 1,350 Dec 15 Retained Earnings 2,860 Dividends Payable : Common Stock ( 1,300 x 2 x $ 1.10) 2,860 Dec 15 Land 143,000 Cash 143,000 Dec 31 Income Summary 63,000 Retained Earnings 63,000Related Questions
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