After looking into debt financing through notes, mortgage, and bonds payable, Nature Gnome Company decides to raise additional capital for a planned business expansion. The company will be able to acquire cash as well as land adjacent to its current business location. Before the following transactions, the balance in Common Stock on January 1, 2021 was $120,000 and included 120,000 shares of common stock issued and outstanding. (There was no Paid-In Capital in Excess of ParCommon.) Nature Gnome Company had the following transactions in 2021: i (Click the icon to view the transactions.) Read the requirements Requirement 1. Journalize the transactions. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Jan. 1: Issued 30,000 shares of $1 par value common stock for a total of $60,000. Date Accounts and Explanation Debit Credit More Info - X Jan. 1 Cash 60,000 30,000 Common Stock-$1 Par Value Paid-In Capital in Excess of ParCommon 30,000 Jan. 1 Issued 30,000 shares of $1 par value common stock for a total of $60,000. Issued 10,000 shares of 6%, $7 par value preferred stock in exchange for land with a market value of $300,000. Issued common stock at a premium. Jan. 10 Dec. 15 Declared total cash dividends of $35,000 Jan 10: Issued 10,000 shares of 6%, $7 par value preferred stock in exchange for land with a market value of $300,000. Dec. 20 Declared a 5% common stock dividend when the market value of the stock was $3.00 per share. Paid the cash dividends. Date Accounts and Explanation Debit Credit Dec. 31 Jan. 10 Land 300,000 Dec. 31 Distributed the stock dividend Preferred Stock-$7 Par Value 70,000 Paid-In Capital in Excess of Par-Preferred 230,000 Print Done Issued preferred stock in exchange for land. x Dec. 15. Declared total cash dividends of $35,000. Requirements Date Accounts and Explanation Debit Credit Dec. 15 Cash Dividends 35,000 30,800 Dividends PayableCommon Dividends PayablePreferred 4,200 1. Journalize the transactions 2. Calculate the balance in Retained Earnings on December 31, 2021. Assume the balance on January 1, 2021 was $5,000 and net income for the year was $463,000. 3. Prepare the stockholders' equity section of the balance sheet as of December 31, 2021. There was no preferred stock issued prior to the 2021 transactions. Declared a cash dividend. Dec. 20: Declared a 5% common stock dividend when the market value of the stock was $3.00 per share Print Done Date Accounts and Explanation Debit Credit Dec. 20 Stock Dividends 22,500 Common Stock Dividend Distributable 7,500 15,000 Paid-In Capital in Excess of ParCommon Declared a 5% stock dividend. Dec 31: Paid the cash dividends. Credit Date Accounts and Explanation Dec. 31 Dividends Payable-Common Dividends PayablePreferred Cash Debit 30,800 4,200 35,000 Payment of cash dividend. Dec. 31: Distributed the stock dividend. Debit Credit Date Accounts and Explanation Dec. 31 Common Stock Dividend Distributable Common Stock-$1 Par Value 7,500 7,500 Issued 5% stock dividend. Requirement 2. Calculate the balance in Retained Earnings on December 31, 2021. Assume the balance on January 1, 2021 was $5,000 and net income for the year was $463,000. Complete the table below to calculate the balance in Retained Earnings on December 31, 2021. Retained Earnings, Jan. 1, 2021 $ 5,000 Plus: Net income 463,000 Less: Cash dividends declared (35,000) Stock dividends declared (22,500) 410,500 Retained Earnings, Dec. 31, 2021 Requirement 3. Prepare the stockholders' equity section of the balance sheet as of December 31, 2021. There was no preferred stock issued prior to the 2021 transactions. Review the journal entries from Requirement 1. Nature Gnome Company Balance Sheet (Partial) December 31, 2021 Paid-In Capital: Total Paid-In Capital Total Stockholders' Equity Review the oumal entries from Requirement 1. Nature Gnome Company Balance Sheet (Partial) December 31, 2021 Paid-In Capital: Common Stock-$1 Par Value; Paid-In Capital in Excess of Par-Common Paid-In Capital in Excess of ParPreferred Preferred Stock6%, $7 Par Value; Retained Earnings Total Paid-In Capital Review the journal entries from Requirement 1. Nature Gnome Company Balance Sheet (Partial) December 31, 2021 Paid-In Capital: shares at cost shares issued and outstanding Total Paid-In Capital i Reference - X Date Debit Credit Jan. 1 60,000 Accounts and Explanation Cash Common Stock-$1 Par Value Paid-In Capital in Excess of ParCommon Issued common stock at par. 30,000 30,000 300,000 Jan. 10 Land Preferred Stock-$7 Par Value Paid In Capital in Excess of ParPreferred Issued preferred stock in exchange for land. 70,000 230,000 35,000 Dec. 15 Cash Dividends Dividends PayablePreferred Dividends PayableCommon Declared a cash dividend. 4,200 30,800 22,500 7,500 Dec. 20 Stock Dividends Common Stock Dividend Distributable Paid In Capital in Excess of ParCommon Declared a 5% stock dividend. 15,000 4,200 30,800 Dec. 31 Dividends PayablePreferred Dividends PayableCommon Cash Payment of cash dividend. 35,000 7,500 Dec. 31 Common Stock Dividend Distributable Common Stock$1 Par Value Issued 5% stock dividend. 7,500 Print Done