Question 5 Partially correct Mark 4.91 out of 5.00 Stockholders' Equity: Transactions and Balance Sheet Presentation The stockholders' equity accounts of Windham Corporation at January 1 appear below: 8 Percent preferred stock, $25 par value, 50,000 shares authorized; 6,800 shares issued and outstanding $170,000 Common stock. $10 par value, 200,000 shares authorized: 50,000 shares issued and outstanding 500,000 Paid-in capital in excess of par value-Preferred stock 68,000 Paid-in capital in excess of par value-Common stock 200,000 Retained earnings 270,000 Support During the year, the following transactions occurred: Jan. 10 Issued 35,000 shares of common stock for $17 cash per share. 23 Purchased 10,000 shares of common stock as treasury stock at $19 per share. Mar. 14 Sold one-half of the treasury shares acquired January 23 for $21 per share. July 15 Issued 3.500 shares of preferred stock in exchange for equipment with a fair market value of $128,000. Nov. 15 Sold 2,000 of the treasury shares acquired January 23 for $24 per share. Dec. 31 Closed the net income of $59,000 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 T-account data. Cash Preferred Stock Common Stock Jan. 10 595,000 0 Beg. 170,000 Beg OV 500,000 Jan.23 ov 190,000 Jul. 150 87,500 Jan. 10 0 350,000 Mar. 14 105.000 0 Bal. 0 257,500 Bal 0 850,000 Nov.15 48,000 Bal. 558,000 Jul.15 Bal Equipment 128,000 0 128,000 Paid-in-Capital in Excess of Par Value - Preferred Stock Beg, 68,000 Jul. 15 0 40,500 Bal 0 108,500 Paid-in-Capital in Excess of Par Value - Common Stock Beg, 200,000 Jan. 10 245,000 Jan. 10 Issued 35,000 shares of common stock for $17 cash per share. 23 Purchased 10,000 shares of common stock as treasury stock at $19 per share. Mar. 14 Sold one-half of the treasury shares acquired January 23 for $21 per share. July 15 Issued 3.500 shares of preferred stock in exchange for equipment with a fair market value of $128,000. Nov. 15 Sold 2,000 of the treasury shares acquired January 23 for $24 per share. Dec. 31 Closed the net income of $59,000 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 T-account data. Cash Preferred Stock Common Stock Jan. 10 595,000 0 Beg. 170,000 Beg. 500,000 Jan.23 0 190,000 Jul. 15 ov 87,500 Jan. 10 OM 350,000 Mar. 14 105,000 0 Bal. OV 257,500 Bal o v 850,000 Nov.15 48,000 Bal. 558,000 Jul.15 Bal Equipment 128,000 128,000 Paid-in-Capital in Excess of Par Value - Preferred Stock Beg. O 68,000 0 40,500 Bal 0 108,500 0 Jul. 15 Paid-in-Capital in Excess of Par Value - Common Stock Beg. 0 200,000 Jan. 100 245,000 Bal. 0 445,000 Bal. Paid-in-Capital from Treasury Stock Mar. 14 10,000 Nov.15 10,000 Bal. 07 20,000 Jan.23 Mar. 14 Nov.15 Bal. Treasury Stock 190,000 0 0 95,000 0 38,000 57,000 0 Retained Earnings O 270,000 0 59,000 0 329,000 Dec.31 Bal. b. Prepare journal entries to record the foregoing transactions and post to 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. 5 Debit 595,000 O 5 Credit 0 350,000 245,000 190,000 0 190,000 07 General Journal Date Description Jan.10 Cash Common Stock Paid-in-Capital in Excess of Par Value - Issued common stock. Jan.23 Treasury Stock - Common Cash Purchased treasury stock. Mar.14 Cash Treasury Stock - Common Paid-in-Capital from Treasury Stock Sold treasury stock. Jul.15 Equipment Preferred Stock Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock for equipment Nov.15 Cash Treasury Stock - Common Paid-in-Capital from Treasury Stock To record sale of treasury stock. 105,000 0 0 95,000 10,000 0 128,000 0 87,500 40,500 48,000 0 38,000 10,000 c. Prepare the December 31 stockholders' equity section of the balance sheet. Do not use negative signs with your answers. Stockholders' Equity Paid in Capital Preferred Stock $ 257,500 Common Stock 850,000 $ 1,107,500 Additional Paid-in-Capital Paid-in-Capital in Excess of Par value - Preferred Stock 108,500 Paid-in-Capital in Excess of Par value - Common Stock 445,000 Paid-in-Capital from Treasury Sto 20,000 573,500 Total Paid-in-Capital 1,681,000 Retained Earnings 329,000 57,000 Less: Treasury Stock-Common Total Stockholders' Equity You have correctly selected 112