Stockholders equity accounts and other related accounts of Gonzales Company as of January 1, 20--, the beginning

Question:

Stockholders’ equity accounts and other related accounts of Gonzales Company as of

January 1, 20--, the beginning of its fiscal year, are shown below.

Preferred stock subscriptions receivable............$ 50,000

Preferred stock, $10 par, 9% (200,000 shares authorized;

20,000 shares issued)......................200,000

Preferred stock subscribed (10,000 shares)............100,000

Paid-in capital in excess of par—preferred stock...........40,000

Common stock, $10 par (100,000 shares authorized;

60,000 shares issued)......................600,000

Paid-in capital in excess of par—common stock..........250,000

Retained earnings......................750,000

During 20--, Gonzales Company completed the following transactions affecting stockholders’ equity:

(a) Received $20,000 for the balance due on subscriptions for preferred stock with a par value of $40,000 and issued the stock.

(b) Purchased 10,000 shares of common treasury stock for $18 per share.

(d) Issued 15,000 shares of common stock in exchange for land with a fair market value of $290,000.

(e) Sold 5,000 shares of common treasury stock for $100,000.

(f) Issued 10,000 shares of preferred stock at $11.50 per share, receiving cash.

(g) Sold 3,000 shares of common treasury stock for $17 per share.

REQUIRED

1. Prepare general journal entries for the transactions, identifying each transaction by letter.

2. Post the journal entries to appropriate T accounts. The cash account has a beginning balance of $300,000.

3. Prepare the stockholders’ equity section of the balance sheet as of December 31, 20--. Net income for the year was $825,000 and dividends of $400,000 were paid.

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