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Stockholders' Equity Transactions, Journal Entries, and T-Accounts The stockholders' equity of Fremantle Corporation at January 1 follows: 8 Percent preferred stock, $100 par value, 20,000 shares authorized: 4,000 shares issued and outstanding $400,000 Common stock, 51 par value, 10,000 shares authorized: 40,000 shares issued and outstanding 40,000 Paid-in capital in excess of par value-Preferred stock 200,000 Paid-in capital in excess of par value-Common stock 800,000 Retained earnings 560,000 Total Stockholders' Equity $2,000,000 The following transactions, among others, occurred during the year Jan 1 Announced a 2 for 1 common stock split, reducing the par value of the common stock to 50 50 per share. Mar 31 Converted 590,000 face value of convertible bonds payable (the book value of the bonds was 594,000) to common stock. Each $1,000 bond converted to 125 shares of common stock June 1 Acquired equipment with a fair market value of $46,000 in exchange for 300 shares of preferred stock. 1 Acquired 11,000 shares of common stock for cash at $21 per share, Nov. 21 Issued 5,000 shares of common stock at 523 cash per share Dec. 28 Sold 1,000 treasury shares at $25 per share. Dec 31 Closed net income of 103,000, to the Retained Earnings account, Sept Required a. Set up T-accounts for the stockholders' equity accounts as of the beginning of the year and enter the January 1 balances Type here to search e O RE hp Cash Bonds Payable Premium on Bonds Payable Mar 31 Mar 31 Sep.01 Nov 21 Dec 28 Equipment Jun 01 Preferred Stock Common Stock Beg Paid-in-Capital in Excess of Par Value - Preferred Stock Beg Jun 01 Bal. Beg Mar 31 Nov.21 Bal Jun 01 Bal Paid-in-Capital In Excess of Par Value - Common Stock Beg Mar 31 Nov.21 Bal Pald-in-Capital from Treasury Stock Dec 28 Bal. Retained Earnings Treasury Stock. Common Sept.01 Dec.28 Bal RI e Bal. Dec 31 Ball Type here to search O Business Course Return to course Retained Earnings Paid-in-Capital from Treasury Stock Dec. 28 Bal. Treasury Stock - Common Sept.01 Dec.28 Bal. Bal. Dec. 31 Bal. b. Prepare journal entries for the given transactions and post them to the T-accounts above in part a. Do not prepare thej post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders' equ General Journal Description Debit Credit Jan 01 (Memorandum) Common Stock split 2 for 1. Date Mar 31 e $ $ Premium on Bonds Payable Common Stock e To record conversion of bonds. Jun 01 Paid-in-Capital in Excess of Par Value . Preferred Stock Issued preferred stock in exchange for equipment. Sept.01 Purchased treasury stock, 21 Type here to search o E Business Course * Return to course post the appropriate amount to the Retained Earnings T-account. Determine the endi General Journal Date Description Debit Credit Jan.01 (Memorandum) Common Stock split 2 for 1. Mar 31 e $ $ Premium on Bonds Payable Common Stock a To record conversion of bonds. . Jun.01 Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock in exchange for equipment. Sept.01 Purchased treasury stock. Nov.21 Common Stock Issued common stock Dec.28 . Paid-in-Capital from Treasury Stock . To record sale of treasury stock. Type here to search i e
