American Laser, Inc., reported the following account balances on January 1.
Accounts Receivable………………………. $ 5,000
Accumulated Depreciation………………… 30,000
Additional Paid-in Capital………………… 90,000
Allowance for Doubtful Accounts………….. 2,000
Bonds Payable…………………………………… 0
Buildings…………………………………. 247,000
Cash……………………………………….. 10,000
Common Stock, 10,000 shares of $ 1 par…. 10,000
Notes Payable (long-term)………………… 10,000
Retained Earnings……………………….. 120,000
Treasury Stock………………………………….. 0
The company entered into the following transactions during the year.
Jan. 15 Issued 5,000 shares of $ 1 par common stock for $ 50,000 cash.
Feb. 15 Reacquired 3,000 shares of $ 1 par common stock into treasury for $ 33,000 cash.
Mar. 15 Reissued 2,000 shares of treasury stock for $ 24,000 cash.
Aug. 15 Reissued 600 shares of treasury stock for $ 4,600 cash.
Sept. 15 Declared (but did not yet pay) a $ 1 cash dividend on each outstanding share of common stock.
Oct. 1 Issued 100, 10-year, $ 1,000 bonds, at a quoted bond price of 101.
Oct. 3 Wrote off a $ 500 balance due from a customer who went bankrupt.
Required:
1. Analyze the effects of each transaction on total assets, liabilities, and stockholders’ equity.
2. Prepare journal entries to record each transaction.
3. Enter the January 1 balances into T-accounts, post the journal entries from requirement 2, and determine ending balances.
4. Prepare the noncurrent liabilities and stockholders’ equity sections of the balance sheet at December 31. At the end of the year, the adjusted net income was $ 20,000.
5. Prepare the closing entry for Dividends.