ACCOUNTING 1: PROB SET Problem 11.

4 JOURNAL ENTRIES January 6 Cash

280,000 Unissued Common Stock 40,000(2x20,000) Common Stock Premium 240,000(12x20,000) *to record the issuance of 20,000 shares of common stock at $14 per share in exchange of cash January 7 Pre-operating Expense 7,000 Unissued Common Stock 1,000(500x2) Common Stock Premium 6,000(7,000-1,000) *payment of services worth 7,000 through common stock shares January 12 Cash 250,000 250,000(2,500x100)

Unissued Preferred Stock *issuance of 2,500 shares of preferred stock for 250,000 cash June 4 Land

225,000(15,000x15) Unissued Common Stock 30,000(15,000x2) Common Stock Premium 195,000(15,000x13) *acquired land in exchange of 15,000 shares of common stock at $15 per share Nov 15 Retained Earnings 25,000(2,500x10) Dividends Payable 25,000 *declaration of dividends on preferred stock at $10 per share to be paid on Dec. 20 Dec 20 Dividends Payable Cash *payment of dividends 25,000 25,000

Dec 31

Net Income (Sales-Expenses) Income Summary *Indication of net income CLOSING ENTRY Dec 31 Income Summary Retained Earnings *closing of income summary

106,500 106,500

106,500 106,500

Stockholders Equity Contributed Capital: Share Capital: Cumulative Preferred Stock, $100 par, 50,000 shares authorized, 2,500 shares Issued and outstanding 250,000 Common Stock, $2 par, 400,000 shares authorized, 35,500 shares issued and outstanding Additional Paid-In Capital: Common Stock Total Contributed Capital: Retained Earnings Total Stakeholders Equity

71,000

321,000

441,000 762,000 106,500 868,500