Question 4

Part A

The stockholders equity section of Teal Corporations balance sheet at December 31, 2020, appears below:

Stockholders equity

Paid-in capital

Common stock, $10 par value, 400,000 shares authorized;

300,000 issued and outstanding $3,000,000

Paid-in capital in excess of par 1,200,000

Total paid-in capital 4,200,000

Retained earnings 900,000

Total stockholders equity $5,100,000

During 2021, the following stock transactions occurred at the company:

Jan. 18 The company issued 50,000 shares of common stock at $23 per share.

Aug. 20 The company purchased 15,000 shares of its common stock at $24 per share to be held in the treasury.

Instructions

1. Prepare the journal entries to record the above stock transactions in 2021.

2. Prepare the stockholders equity section of the balance sheet for Teal Corporation at December 31, 2021. Assume that net income for the year was $150,000 and that no dividends were declared.