The post closing trial balance of Sunland Corporation at December 31, 2021, contains the following shareholders equity accounts $5 noncumulative preferred shares (9,800 issued) $1,078,000 Common shares (408,400 issued) 2,045,600 Retained earnings 3,160,600 A review of the accounting records reveals the following 1 The January 1, 2021, balance in Preferred Shares was $1,078,000, Common Shares was $1,308,000 (327,000 shares), the balance in Contributed SurplusReacquisition of Common Shares was $32,400, and the balance in Retained Earnings was $2,448,000 2 One of the companys shareholders needed cash for a personal expenditure On January 15, the company agreed to reacquire 21,600 shares from this shareholder for $7 per share 3 On July 1, the company corrected a prior period error that resulted in an increase to the Long Term Investment account, as well as to the prior years profit of $258,000 before income tax 4 On October 1, 103,000 common shares were sold for $8 per share 5 The preferred shareholders dividend was declared and paid in 2021 for two quarters Due to a cash shortage, the last two quarters dividends were not declared or paid 6 Profit for the year before income tax was $768,000 The company has a 25 income tax rate Prepare journal entries to record transactions (2) to (5) and post to general ledger accounts (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts Record journal entries in the order presented in the problem ) Date Account Titles and Explanation Debit Credit Jan 15 Common Shares 86400 Contributed Surplus Reacquisition of Common Shares 32400 Retained Earnings 32400 Cash 151200 (To record reacquisition of common shares ) Mar 31 Dividends Payable Cash (To record cash dividend ) Jun 30 Dividends Payable Cash (To record cash dividend ) Jul 1 (To record correction of error ) Oct 1 Cash 824000 Common Shares 824000 (Issued common shares for cash )

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Posted on Jul 18, 2024

The post-closing trial balance of Sunland Corporation at December 31, 2021, contains the following shareholders equity accounts: $5 noncumulative preferred shares (9,800 issued) $1,078,000 Common

The post-closing trial balance of Sunland Corporation at December 31, 2021, contains the following shareholders equity accounts:

$5 noncumulative preferred shares (9,800 issued)		$1,078,000
Common shares (408,400 issued)		2,045,600
Retained earnings		3,160,600

A review of the accounting records reveals the following:

1.		The January 1, 2021, balance in Preferred Shares was $1,078,000, Common Shares was $1,308,000 (327,000 shares), the balance in Contributed SurplusReacquisition of Common Shares was $32,400, and the balance in Retained Earnings was $2,448,000.
2.		One of the companys shareholders needed cash for a personal expenditure. On January 15, the company agreed to reacquire 21,600 shares from this shareholder for $7 per share.
3.		On July 1, the company corrected a prior period error that resulted in an increase to the Long-Term Investment account, as well as to the prior years profit of $258,000 before income tax.
4.		On October 1, 103,000 common shares were sold for $8 per share.
5.		The preferred shareholders dividend was declared and paid in 2021 for two quarters. Due to a cash shortage, the last two quarters dividends were not declared or paid.
6.		Profit for the year before income tax was $768,000. The company has a 25% income tax rate.

Prepare journal entries to record transactions (2) to (5) and post to general ledger accounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

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Date Account Titles and Explanation Debit Credit Jan. 15 Common Shares 86400 Contributed Surplus - Reacquisition of Common Shares 32400 Retained Earnings 32400 Cash 151200 (To record reacquisition of common shares.) Mar. 31 Dividends Payable Cash (To record cash dividend.) Jun. 30 Dividends Payable Cash (To record cash dividend.) Jul. 1 (To record correction of error.) Oct. 1 Cash 824000 Common Shares 824000 (Issued common shares for cash.)