ME MOC Freb wa Ch. 1 Question 1 Correct Mark 1.00 out of 1.00 Stockholders' Equity: Transactions and Balance Sheet Presentation The stockholders' equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 parva us, 20,000 shares authorized: 3,000 shares Issued and outstanding $900.000 Common stock. $15 par value, 100,000 shares authorized, 40,000 shares Issued and outstanding 500,000 Paid-in capital In excess of par value-Preferred stock 24,000 Pald-in capital in excess of par value-Common stock 380.000 Retained earnings 325,000 Total Stockholders Equity $1,809,000 The following transactions, among others, occurred during the year: jan. 12 Announced 2 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization wes increased to 300,000 shares, Converted $41,000 face value of convertible bonds payable (the book value of the bonds was $48 000j to common stock. Each $1,000 band converted to 125 shares of Mar. 31 common stock. June 1 Acquired equipment with a fair market value of $85 000 in exchange for 500 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at 811 par share. Oct 12 Sold 1,500 treasury shares at $13 per share. Now. 21 Issued 9,000 shares of stock at $ 12 per share Dec. 28 sold 1,200 treasury shares at $10 par share. 31 Closed net Income of $84,000 to the Retained Earnings account Required Prepare journal entries for the given trans actions and post them to the T-accounts. Do not prepare the journal entry for the Dec. 21 transaction, but post the appropriate amount to the Retained Earnings T-account Determine the ending balances for the stockholders equity sccounts. Prepare the stockholders equity section of the balance sheet at December 21. General Journal Date Description Dobit Credit lan. 12 (Memorandum] Common Stock splits for Mar.31 Bonds Payable 41,000 3 premium on Bonds Payable 2,000 v S Common Stock 25 825 Falc-in-Capital In Excess of Par Value - Common Stock 17375 w To record comversions of bonds. Jun.01 Equipment 85,000 w Preferred Stock 50.000 Palo-in-Capital In Excess of Par Value - Preferred Stock 15,000 Issued preferred stock in exchange for equipment. Sapt.01 Treasury Scock . Common 110,000 Cash 110,000 Purchased treasury stock. Oct.12 19.500 Treasury Stock - Common 15.500 4 Palchin-Capital from Treasury Stock 8.000 w Gold treasury stock Nov.21 Cash 20,000 Common Stock 25,000 Palchin-Capital In Excess of Par Value - Common Stock 35,000 w Issued common stock. Dec.28 Cast 12,000 Paid-in-Capital from Treasury Stock 1,200 Treasury Stock . Common 13.200 4 To record sale of treasury stock