Question 2 Not yet answered Marked out of 3.00 Rag question 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; 5,000 shares issued and outstanding Common stock, $1 par value, 100,000 shares $500,000 authorized; 40,000 shares issued and outstanding 40,000 Paid-in capital in excess of par value-Preferred stock Paid-in capital in excess of par value-Common stock Retained earnings 200,000 800,000 625,000 Total Stockholders' Equity $2,165,000 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 $0.50 per share. Mar. 31 Converted $75,000 face value of convertible bonds payable (the book value of the bonds was $83,000) to common stock. Each $1,000 bond converted to 110 shares of common stock. 1 Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock June Sept. Acquired 15,000 shares of common stock for cash at $20 per share. Nov. 21 Issued 5,000 shares of common stock at $22 cash per share. Dec. 28 Sold 1,000 treasury shares at $23 per share. 31 Closed net income of $125,000, to the Retained Earnings account. Required a. Set up T-accounts for the stockholders' equity accounts as of the beginning of the year and enter the January 1 balances. Hint: Complete part b. below prior to entering any additional T-account data. Cash Sep.01 Nov.21 Dec.28 Bonds Payable Mar 31 Premium on Bonds Payable Equipment Mar 31 Jun.01 Preferred Stock Common Stock Paid-in-Capital in Excess of Par Value Beg. Jun.01 Beg. Jan.01 Preferred Stock (2 for 1 split) Mar 31 Nov.21 Beg Jun.01 Bal. Paid-in-Capital from Treasury Stock Treasury Stock - Common Retained Earnings Dec.28 Sept.01 Bal. Dec.28 Bal. Dec.31 Bal Bal Paid-in-Capital in Excess of Par Value Common Stock Mar.31 Nov.21 Bal b. Prepare journal entries for the given transactions and post them to the T-accounts above in part a. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders' equity accounts. General Journal Date Description Jan.01 (Memorandum) Common Stock split 2 for 1. Debit Credit Mar.31 Premium on Bonds Payable Common Stock To record conversions of bonds. Jun.01 Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock in exchange for equipment. Sept.01 Nov.21 Dec.28 Purchased treasury stock. Common Stock Issued common stock Paid-in-Capital from Treasury Stock To record sale of treasury stock. = =