Stockholders Equity Transactions, Journal Entries, and T-Accounts

The stockholders equity of Fremantle Corporation at January 1 follows:

8 Percent preferred stock, $110 par value, 20,000 shares
authorized; 4,000 shares issued and outstanding	$440,000
Common stock, $4 par value, 10,000 shares
authorized; 40,000 shares issued and outstanding	160,000
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	$2,150,000

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 $2 per share.
Mar.	31	Converted $90,000 face value of convertible bonds payable (the book value of the bonds was $93,000) 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 500 shares of preferred stock.
Sept.	1	Acquired 10,000 shares of common stock for cash at $20 per share.
Nov.	21	Issued 5,000 shares of common stock at $23 cash per share.
Dec.	28	Sold 1,000 treasury shares at $24 per share.
	31	Closed net income of $107,000, 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
Sep.01	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.	Answer	Answer
Jun.01	Answer	Answer
Bal.	Answer	Answer

Common Stock
Beg.	Answer	Answer
Mar.31	Answer	Answer
Nov.21	Answer	Answer
Bal.	Answer	Answer

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

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

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

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

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

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	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	Premium on Bonds Payable	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	To record conversion of bonds.
Jun.01	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 - CommonBonds PayablePremium on Bonds Payable	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	Paid-in-Capital in Excess of Par Value - Preferred Stock	Answer	Answer
	Issued preferred stock in exchange for equipment.
Sept.01	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 - CommonBonds PayablePremium on Bonds Payable	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	Purchased treasury stock.
Nov.21	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 - CommonBonds PayablePremium on Bonds Payable	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	Issued common stock.
Dec.28	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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	Paid-in-Capital from Treasury 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 - CommonBonds PayablePremium on Bonds Payable	Answer	Answer
	To record sale of treasury stock.