Question
1. Open the general ledger accounts and enter the balances for January 1, 2016. Obtain the necessary figures from the trial balance. 2. Analyze the
1. Open the general ledger accounts and enter the balances for January 1, 2016. Obtain the
necessary figures from the trial balance.
2. Analyze the transactions on the pages that follow, and record them in the general journal.
Use 1 as the number of the first journal page.
3. Post the journal entries to the general ledger accounts.
4. Prepare a worksheet for the year ended December 31, 2016.
5. Prepare a summary income statement for the year ended December 31, 2016.
6. Prepare a statement of retained earnings for the year ended December 31, 2016.
7. Prepare a balance sheet as of December 31, 2016.
8. Journalize and post the adjusting entries as of December 31, 2016.
9. Journalize and post the closing entries as of December 31, 2016.
Analyze: Assume that the firm declared and issued a 3:1 stock split of common stock in 2016.
What is the effect on total par value?
Transactions
Jan 5 issued 1,000 shares for 5 percent $100 par preferred stock for $101 per share. (The corporation has been authorized to issue 10,000 shares of preferred stock)
Jan 15 paid estimated income taxes of $17,000 occurred at the end of 2015
Apr 1 paid semiannual bond interest on the 10-year, 10 percent bonds payable and amortized the premium for the period since Dec 31, 2015 (the interest and premium were recorded as of Dec 31, 2015; the entry was not reversed) the bonds were issued Oct 1, 2014, at a price of 103, and they mature on Oct 1, 2024. Use straight-line amortization
July 1 The Texas Companys board of directors declared a cash dividend of $0.10 per share on the common stock. The dividend is payable on July 26 to stockholders of record as of July 15
July 26 Paid the cash dividend on the common stock
Aug 12 A purchase of 600 preferred stock on January 5 asked the corporation to repurchase the shares. The corporation repurchased the stock for $102 per share. The stock is to be held by the corporation until it can be resold to another purchaser
Oct 1 paid the semiannual bond interest and recorded amortization of the bond premium
Dec 1 Because of its good cash position and current bond prices, the Texas Company repurchased and retired $20,000 par value of the 10 percent bonds that is outstanding. The repurchase price was 98, plus accrued interest.
Dec 15 The Companys board of directors declared a cash dividend of $5 per share on the outstanding preferred stock. This dividend is payable on Jan 10 to stockholders of record as of Dec 31
Dec 15 the board of directors also declared a 10 percent stock dividend on the outstanding common stock the new shares are to be distributed on January 10 to stockholders of records as of December 31. At that time the dividend was declared, the common stock had a fair market value of $15 per share.
Dec 30 Received a subscription for 500 shares of the Texas Companys common stock at $12 per share from the companys president. Received cash equal to one-half the purchase price on the date of subscription. The balance of the purchase price is to be paid on January 15, 2017. (the subscriber will not be entitled to the stock dividend previously decrlared on the outstanding shares of common stock)
Dec 30. Because of management of Texas foresees the need to expand a warehouse the firm owns, the board of directors has restricted future dividends payments. Record the appropriation of $100,000 of retained earnings for plant expansion.
Debit | Credit | |
cash | $176,000 | |
Accounts Receivable | 170,000.00 | |
Allowance for Doubtful Accounts | $5,000 | |
Subscriptions Receivable - Common Stock | ||
Interest Receivable | ||
Merchandise Inventory | 150,000.00 | |
Land | 85,000.00 | |
Buildings | 225,000.00 | |
Accumulated Depreciation - Buildings | 22,500.00 | |
Furniture and Equipment | 70,000.00 | |
Accumulaed Depereciation - Furniture and Equipment | 14,000.00 | |
Organization Costs | 6,000.00 | |
Accounts Payable | 75,000.00 | |
Interest Payable | 2,500.00 | |
Estimated Income taxes Payable | 17,000.00 | |
Dividends Payable - Preferred Stock | ||
Dividends Payable - Common Stock | ||
10-year, 10% Bonds Payable | 100,000.00 | |
Premium on Bonds Payable | 2,625.00 | |
5% Preferred Stock ($100 par, 10,000 shares authorized) | 100,000.00 | |
Paid-in Capital in Excess of par - Preferred Stock | 10,000.00 | |
Common Stock ($10 par, 100,00 shares authorized) | 200,000.00 | |
Paid in capital in excess of Par - Common Stock | 25,000.00 | |
common Stock Subsribed | ||
Common Stock Dividend Distributable | ||
Retained Earnings Appropriated | 100,000.00 | |
retained Earnings Unappropriated | 208,375.00 | |
Treasure Stock - Preferred | ||
Income Summary | ||
Sales | ||
Purchases | ||
Operating Expenses | ||
Interest Income | ||
Gain on early Retirement of Bonds Payable | ||
Interest Epense | ||
Amortization of Organization Costs | ||
Income Tax Expense | ||
Totals | $882,000 | 882,000.00 |
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