Problem 1

The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2014 is as follows:

Stockholders' Equity

Preferred stock, 5%, $100 par value; authorized, 15,000 shares

Issued, 4,000 shares $ 400,000

Common stock, $5 par value; authorized, 5,000,000 shares;

issued, 400,000 shares 2,000,000

Paid-in capital in excess of par 850,000

Retained earnings 3,000,000

$6,250,000

The following events occurred during 2015:

1. Jan. 5 30,000 shares of authorized and unissued common stock were sold for $8 per share.

2. Jan. 16 Declared a cash dividend of 20 cents per share, payable February 15 to stock-holders of record on February 5.

3. Feb. 10 40,000 shares of authorized and unissued common stock were sold for $12 per share.

4. Feb, 15 Paid the cash dividend declared on January 16 (transaction #2).

5. Feb. 22 5,000 shares of authorized and unissued preferred stock were sold for $105 per share

6. March 1 A 30% stock dividend was declared. Fair value per share is currently $15.

7. March 31 Issued the stock dividend shares declared on March 1 (transaction #6)

8. July 1 A two-for-one split was carried out. The par value of the stock was to be reduced to $2.50 per share. Fair value on July 1 was $18 per share.

9. Aug. 1 A 15% stock dividend was declared and issued. Fair value is currently $10 per share.

10. Aug. 31 Issued the stock dividend shares declared on Aug. 1 (transaction #9)

11. Oct. 5 Issued 80,000 shares of common stock in exchange for a tract of land. The asking price for the land was $125,000. The stock is actively traded and has a current market price of $20 per share.

12. Nov. 2 Purchased 20,000 shares of the companys own common stock at a cost of $4 per share.

13. Nov. 15 A cash dividend of 20 cents per share was declared, payable January 1, 2016, to stockholders of record on Nov. 30, 2015

14. Nov. 22 Sold 10,000 shares of the common stock from the treasury at a price of $6 per share.

15. Dec. 10 The annual preferred stock dividend was declared, payable January 1, 2016.

16. Dec. 18 Sold 5,000 shares of the common stock from the treasury at a price of $3 per share.

Instructions

A. Prepare journal entries for the aforementioned transactions for Benton Corporation for the year 2015.B. Prepare a comprehensive stockholders equity section of the balance sheet at December 31, 2015, taking into consideration the effects of the 2015 transactions on the stockholders equity accounts. (Hint: You may want to set up T-accounts and post from the journal entries to the T-accounts.)