William Bost organized Frontier Western Wear, Inc., early in 2014. On January 15, the corporation issued to

Question:

William Bost organized Frontier Western Wear, Inc., early in 2014. On January 15, the issued to Bost and other investors 40,000 shares of capital stock at $20 per share. After the revenue and expense accounts (except Income Tax Expense) were closed into the Income Summary account at the end of 2014, the account showed a before-tax profit of $120,000. The income tax rate for the is 40 percent. No dividends were declared during the year.
On March 15, 2015, the board of directors declared a cash of 50 cents per share, payable on April 15.
Instructions
a. Prepare the journal entries for 2014 to (1) record the issuance of the common stock, (2) record the income tax liability at December 31, and (3) close the Income Tax Expense account.
b. Prepare the journal entries in 2015 for the declaration of the on March 15 and payment of the on April 15.
c. Operations in 2015 resulted in an $18,000 net loss. Prepare the journal entries to close the Income Summary and Dividends accounts at December 31, 2015.
d. Prepare the stockholders' equity section of the at December 31, 2015. Include a separate supporting schedule showing your determination of retained earnings at that date.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...