Stockholders Equity: Transactions and Balance Sheet Presentation

The stockholders equity of Summit Corporation at January 1 follows:

7 Percent preferred stock, $100 par value, 20,000 shares authorized;
5,000 shares issued and outstanding	$500,000
Common stock, $15 par value, 100,000 shares authorized;
40,000 shares issued and outstanding	600,000
Paid-in capital in excess of par value-Preferred stock	24,000
Paid-in capital in excess of par value-Common stock	360,000
Retained earnings	325,000
Total Stockholders' Equity	$1,809,000

The following transactions, among others, occurred during the year:

Jan.	12	Announced a 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization was increased to 300,000 shares.
Mar.	31	Converted $42,000 face value of convertible bonds payable (the book value of the bonds was $46,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.
June	1	Acquired equipment with a fair market value of $60,000 in exchange for 600 shares of preferred stock.
Sept.	1	Acquired 10,000 shares of common stock for cash at $16 per share.
Oct.	12	Sold 1,500 treasury shares at $18 per share.
Nov.	21	Issued 5,000 shares of common stock at $13 per share.
Dec.	28	Sold 1,200 treasury shares at $14 per share.
	31	Closed net income of $85,000 to the Retained Earnings account.

Required

• Prepare journal entries for the given transactions and post them to the T-accounts. 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.
• Prepare the stockholders equity section of the balance sheet at December 31.