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.

• Journal entries
• T-Accounts
• Stockholder's equity section

General Journal
Date	Description	Debit	Credit
Jan.12	(Memorandum) Common Stock split 3 for 1.
Mar.31	Answer

Answer	Answer
	Premium on Bonds Payable	Answer	Answer
	Common Stock	Answer	Answer
	Answer

Answer	Answer
	To record conversions of bonds.
Jun.01	Answer

Answer	Answer
	Answer

Answer	Answer
	Issued preferred stock in exchange for equipment.
Sept.01	Answer

Answer	Answer
	Answer

Answer	Answer
	Purchased treasury stock.
Oct.12	Answer

Answer	Answer
	Treasury Stock - Common	Answer	Answer
	Answer

Answer	Answer
	Sold treasury stock.
Nov.21	Answer

Answer	Answer
	Common Stock	Answer	Answer
	Answer

Answer	Answer
	Issued common stock.
Dec.28	Answer

Answer	Answer
	Paid-in-Capital from Treasury Stock	Answer	Answer
	Answer

Answer	Answer
	To record sale of treasury stock.

Cash
Sept.01	Answer	Answer
Oct.12	Answer	Answer
Nov.21	Answer	Answer
Dec.28	Answer	Answer

Bonds Payable
Mar.31	Answer	Answer

Premium on Bonds Payable
Mar.31	Answer	Answer

Equipment
Jun.01	Answer	Answer

Preferred Stock
Beg. bal		500,000
Jun.01	Answer	Answer
Bal	Answer	Answer

Common Stock
Beg. bal		600,000
Jan.12		(3 for 1 split)
Mar.31	Answer	Answer
Nov.21	Answer	Answer
Bal.	Answer	Answer

Paid-in-Capital in Excess of Par Value - Preferred Stock
Beg. bal		24,000
Jun.01	Answer	Answer
Bal.	Answer	Answer

Paid-in-Capital in Excess of Par Value - Common Stock
Beg. bal		360,000
Mar.31	Answer	Answer
Nov.21	Answer	Answer
Bal.	Answer	Answer

Paid-in-Capital from Treasury Stock
Oct.12	Answer	Answer
Dec.28	Answer	Answer
Bal.	Answer	Answer

Treasury Stock - Common
Sept.01	Answer	Answer
Oct.12	Answer	Answer
Dec.28	Answer	Answer
Bal.	Answer	Answer

Retained Earnings
Beg. bal		325,000
Dec.31	Answer	Answer
Bal.	Answer	Answer

Stockholders' Equity
	Paid in Capital
	Answer

Answer
	Answer

Answer	Answer
	Additional Paid-in-Capital
	Paid-in-Capital in Excess of Par value -Preferred Stock	Answer
	Paid-in-Capital in Excess of Par value - Common Stock	Answer
	Answer

Answer	Answer
	Total Paid-in-Capital		Answer
	Answer

	Answer
			Answer
	Answer

	Answer
	Answer

Answer