Stockholders Equity: Transactions and Balance Sheet Presentation

The stockholders equity accounts of Windham Corporation at January 1 appear below:

8 Percent preferred stock, $28 par value, 50,000 shares authorized;
6,800 shares issued and outstanding	$190,400
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

During the year, the following transactions occurred:

Jan.	10	Issued 28,000 shares of common stock for $20 cash per share.
	23	Purchased 8,000 shares of common stock as treasury stock at $22 per share.
Mar.	14	Sold one-half of the treasury shares acquired January 23 for $24 per share.
July	15	Issued 3,200 shares of preferred stock in exchange for equipment with a fair market value of $128,000.
Nov.	15	Sold 1,000 of the treasury shares acquired January 23 for $27 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
Jan.10	Answer	Answer
Jan.23	Answer	Answer
Mar.14	Answer	Answer
Nov.15	Answer	Answer
Bal	Answer	Answer

Preferred Stock
Beg.	Answer	Answer
Jul.15	Answer	Answer
Bal.	Answer	Answer

Common Stock
Beg.	Answer	Answer
Jan.10	Answer	Answer
Bal	Answer	Answer

Equipment
Jul.15	Answer	Answer
Bal	Answer	Answer

Paid-in-Capital in Excess of Par Value - Preferred Stock
Beg.	Answer	Answer
Jul.15	Answer	Answer
Bal	Answer	Answer

Paid-in-Capital in Excess of Par Value - Common Stock
Beg.	Answer	Answer
Jan.10	Answer	Answer
Bal.	Answer	Answer

Paid-in-Capital from Treasury Stock
Mar.14	Answer	Answer
Nov.15	Answer	Answer
Bal.	Answer	Answer

Treasury Stock
Jan.23	Answer	Answer
Mar.14	Answer	Answer
Nov.15	Answer	Answer
Bal.	Answer	Answer

Retained Earnings
Bal.	Answer	Answer
Dec.31	Answer	Answer
Bal.	Answer	Answer

b. Prepare journal entries to record the foregoing transactions and post to T-accounts (set up any additional T-accounts needed). 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.

General Journal
Date	Description	Debit	Credit
Jan.10	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	$Answer	$Answer
	Common Stock	Answer	Answer
	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Issued common stock.
Jan.23	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Purchased treasury stock.
Mar.14	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Treasury Stock - Common	Answer	Answer
	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Sold treasury stock.
Jul.15	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Paid-in-Capital in Excess of Par Value - Preferred Stock	Answer	Answer
	Issued preferred stock for equipment.
Nov.15	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	Treasury Stock - Common	Answer	Answer
	AnswerCashCommon StockEquipmentPaid-in-Capital from Treasury StockPaid-in-Capital in Excess of Par Value - Common StockPaid-in-Capital in Excess of Par Value - Preferred StockPreferred StockTreasury Stock - Common	Answer	Answer
	To record sale of treasury stock.

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
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-Capital	$Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-Capital	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
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common	Answer	Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-Capital		Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-Capital		Answer
			Answer
	Less: Treasury Stock-Common		Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-Capital		$Answer