You are engaged in the audit of Phoenix Corp., a new client, at the close of its first fiscal year, April 30, 20X1. The accounts had been closed before the time you began your year-end fieldwork.
You review the following stockholders€™ equity accounts in the general ledger:

Other information in your working papers includes the following:
1. Phoenix€™s articles of incorporation filed April 17, 20X0, authorized 100,000 shares of no-par-value capital stock.
2. Directors€™ minutes include the following resolutions:
4/18/X0 Established $50 per share stated value for capital stock.
4/30/X0 Authorized issue of 10,000 shares to an underwriting syndicate for $75 per share.
9/13/X0 Authorized acquisition of 1,000 shares from a dissident holder at $80 per share.
2/1/X1 Authorized reissue of 500 treasury shares at $85 per share.
4/28/X1 Declared 10 percent stock dividend, payable May 18, 20X1, to stockholders of record May 4, 20X1.
3. The following costs of the May 1, 20X0, and February 2, 20X1, stock issuances were charged to the named expense accounts: Printing Expense, $2,500; Legal Fees, $17,350; Accounting Fees, $12,000; and SEC Fees, $150.
4. Market values for Phoenix Corp. capital stock on various dates were:
9/13/X0 $78.50 2/2/X1 $85.00
9/14/X0 $79.00 4/28/X1 $90.00
5. Phoenix Corp.€™s combined federal and state income tax rates total 55 percent.
a. Prepare the necessary adjusting journal entries at April 30, 20X1.
b. Prepare the stockholders€™ equity section of Phoenix Corp.€™s April 30, 20X1, balancesheet.

Transcribed Image Text:

Capital Stock SV1IX0 CR1 4/28/X1 J12-5 500,000 50,000 Pald-in Capital In Excess of Stated Value 5/1IX0 CR1 2/2IX1 CR10 250,000 2,500 Retalned Earnings 50,000 4/28/X1 J12-5 4/30/X1 J12-14 800,000 Treasury Stock 9/14IXO CP5 80,000 2/2IX1 CR10 40,000 Income Summary 4/30/X1 J12-13 4/30/X1 J12-14 5,200,000 800,000 4/30/X1 112-12 6,000,000