Stockholders' Equity Transactions, Journal Entries, and T-Accounts The stockholders' equity of Fremantle Corporation at January 1 follows: 8 Percent preferred stock, $100 par value, 20,000 shares authorized; 4,000 shares issued and outstanding $400,000 Common stock, $2 par value, 10,000 shares authorized; 40,000 shares issued and outstanding 80,000 Paid-in capital in excess of par value-Preferred stock 200,000 Paid-in capital in excess of par value-Common stock 800,000 Retained earnings 550,000 Total Stockholders' Equity $2,030,000 The following transactions, among others, occurred during the year: Jan. 1 Announced a 2-for-1 common stock split, reducing the par value of the common stock to $1 per share. Converted $70,000 face value of convertible bonds payable (the book value of the bonds was $75,000) to common stock. Each $1,000 bond converted Mar. 31 to 125 shares of common stock. June 1 Acquired equipment with a fair market value of $45,000 in exchange for 300 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at $20 per share. Nov. 21 Isued 5,000 shares of common stock at $22 cash per share. Dec. 28 Sold 1,000 treasury shares at $24 per share. 31 Closed net income of $103,000, 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 any additional T-account data. Cash Bonds Payable Premium on Bonds Payable Sep.01 Mar.31 Mar.31 Nov.21 Dec.28 Equipment Jun.01 Preferred Stock Common Stock Beg. Beg. Jun.01 Mar.31 Bal. Nov.21 Bal. Paid-in-Capital in Excess of Par Value - Preferred Stock Paid-in-Capital in Excess of Par Value - Common Stock Beg. Beg. Jun.01 Mar.31 Bal, Nov.21 Bal. Paid-in-Capital from Treasury Stock Treasury Stock - Common Retained Earnings Dec.28 Sept.01 Bal. Bal. Dec.28 Dec.31 Bal. Bal. b. Prepare journal entries for the given transactions and post them to the 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. General Journal Date Description Debit Credit Jan.01 (Memorandum) Common Stock split 2 for 1. Mar.31 $ 2$ Premium on Bonds Payable Common Stock To record conversion of bonds. Jun.01 Paid-in-Capital in Excess of Par Value - Preferred Stock Issued preferred stock in exchange for equipment. Sept.01 Purchased treasury stock. Nov.21 Common Stock Issued common stock. Dec.28 Paid-in-Capital from Treasury Stock To record sale of treasury stock.