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. Converted $41,000 face value of convertible bonds payable (the book value of the bonds was $43,000) to common stock. Each $1,000 bond converted to 125 shares Mar. 31 of common stock. June 1 Acquired equipment with a fair market value of $65,000 in exchange for 500 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at $11 per share. Oct. 12 Sold 1,500 treasury shares at $13 per share. Nov. 21 Issued 5,000 shares of common stock at $12 per share. Dec. 28 Sold 1,200 treasury shares at $10 per share. 31 Closed net income of $84,000 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 Do not use negative signs with your answers. 651,875 X 550,000 x $ 1,201,875 x Stockholders' Equity Paid in Capital Common Stock * * $ Preferred Stock 4 x Additional Paid-in-Capital Paid-in-Capital in Excess of Par value -Preferred Stock Paid-in-Capital in Excess of Par value - Common Stock Paid-in-Capital from Treasury Stock Total Paid-in-Capital Retained Earnings 34,000 x 406,125 x 3,000 x 443,125 x 1,645,000 * 323,800 x 1,968,800 x 73,000 X 1,895,800 x Less: Treasury Stock - Common Total Stockholders' Equity $ Bonds Payable 40,000 x Premium on Bonds Payable ox 3,000 x 100,000 x Mar.31 OX Mar.31 Sept.01 Oct.12 Nov.21 Dec.28 Cash 0 18,000 x 55,000 x 10,800 x 0 Equipment 60,000 X Jun 01 0 Beg. bal Jun.01 Bal Preferred Stock 500,000 0v 50,000 0 550,000 Beg, bal Jan.12 Mar 31 Nov.21 Bal. Common Stock 600,000 (3 for 1 split) 26,875 x 0 25,000 0 0 * Paid-in-Capital in Excess of Par Value - Preferred Stock Beg. bal 24,000 Jun.01 O 10,000 X Bal. 0 34,000 x Paid-in-Capital in Excess of Par Value - Common Stock Beg. bal 360,000 Mar.31 0 16,125 x Nov.21 0 30,000 x Bal. O 0x Paid-in-Capital from Treasury Stock Oct. 12 0 3,000 Dec.28 1,200 0 Bal. O OX Sept.01 Oct.12 Dec.28 Bal. Treasury Stock - Common 100,000 x 0 0 15,000 x 0 12,000 x 0x0 Debit Credit $ $ 40,000 X $ 3,000 X $ o 0 0 0 26,875 x 16,125 x 60,000 x 0 O 50,000 10,000 X O General Journal Date Description Jan.12 (Memorandum) Common Stock split 3 for 1. Mar.31 Bonds Payable Premium on Bonds Payable Common Stock Paid-in-Capital in Excess of Par Value - Common Stock To record conversions of bonds. Jun.01 Equipment Preferred Stock Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock in exchange for equipment Sept.01 Treasury Stock - Common Cash Purchased treasury stock. Oct.12 Cash Treasury Stock - Common Paid-in-Capital from Treasury Stock Sold treasury stock. Nov.21 Cash Common Stock Paid-in-Capital in Excess of Par Value - Common Stock Issued common stock. Dec.28 Cash Paid-in-Capital from Treasury Stock Treasury Stock - Common To record sale of treasury stock. 100,000 * 0 0 100,000 X 0 18,000 X O O 15,000 x 3,000 55,000 x 0 O 0 25,000 30,000 x 0 10,800 x 1,200 0 12,000 x O 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. Converted $41,000 face value of convertible bonds payable (the book value of the bonds was $43,000) to common stock. Each $1,000 bond converted to 125 shares Mar. 31 of common stock. June 1 Acquired equipment with a fair market value of $65,000 in exchange for 500 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at $11 per share. Oct. 12 Sold 1,500 treasury shares at $13 per share. Nov. 21 Issued 5,000 shares of common stock at $12 per share. Dec. 28 Sold 1,200 treasury shares at $10 per share. 31 Closed net income of $84,000 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 Do not use negative signs with your answers. 651,875 X 550,000 x $ 1,201,875 x Stockholders' Equity Paid in Capital Common Stock * * $ Preferred Stock 4 x Additional Paid-in-Capital Paid-in-Capital in Excess of Par value -Preferred Stock Paid-in-Capital in Excess of Par value - Common Stock Paid-in-Capital from Treasury Stock Total Paid-in-Capital Retained Earnings 34,000 x 406,125 x 3,000 x 443,125 x 1,645,000 * 323,800 x 1,968,800 x 73,000 X 1,895,800 x Less: Treasury Stock - Common Total Stockholders' Equity $ Bonds Payable 40,000 x Premium on Bonds Payable ox 3,000 x 100,000 x Mar.31 OX Mar.31 Sept.01 Oct.12 Nov.21 Dec.28 Cash 0 18,000 x 55,000 x 10,800 x 0 Equipment 60,000 X Jun 01 0 Beg. bal Jun.01 Bal Preferred Stock 500,000 0v 50,000 0 550,000 Beg, bal Jan.12 Mar 31 Nov.21 Bal. Common Stock 600,000 (3 for 1 split) 26,875 x 0 25,000 0 0 * Paid-in-Capital in Excess of Par Value - Preferred Stock Beg. bal 24,000 Jun.01 O 10,000 X Bal. 0 34,000 x Paid-in-Capital in Excess of Par Value - Common Stock Beg. bal 360,000 Mar.31 0 16,125 x Nov.21 0 30,000 x Bal. O 0x Paid-in-Capital from Treasury Stock Oct. 12 0 3,000 Dec.28 1,200 0 Bal. O OX Sept.01 Oct.12 Dec.28 Bal. Treasury Stock - Common 100,000 x 0 0 15,000 x 0 12,000 x 0x0 Debit Credit $ $ 40,000 X $ 3,000 X $ o 0 0 0 26,875 x 16,125 x 60,000 x 0 O 50,000 10,000 X O General Journal Date Description Jan.12 (Memorandum) Common Stock split 3 for 1. Mar.31 Bonds Payable Premium on Bonds Payable Common Stock Paid-in-Capital in Excess of Par Value - Common Stock To record conversions of bonds. Jun.01 Equipment Preferred Stock Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock in exchange for equipment Sept.01 Treasury Stock - Common Cash Purchased treasury stock. Oct.12 Cash Treasury Stock - Common Paid-in-Capital from Treasury Stock Sold treasury stock. Nov.21 Cash Common Stock Paid-in-Capital in Excess of Par Value - Common Stock Issued common stock. Dec.28 Cash Paid-in-Capital from Treasury Stock Treasury Stock - Common To record sale of treasury stock. 100,000 * 0 0 100,000 X 0 18,000 X O O 15,000 x 3,000 55,000 x 0 O 0 25,000 30,000 x 0 10,800 x 1,200 0 12,000 x O