Stockholders Equity: Transactions and Balance Sheet Presentation The stockholder's equity accounts of Cooper Corporation at January 1 follow:
Common stock, $1 par value, 350,000 shares authorized;
150,000 shares issued and outstanding....................................... $150,000
Paid-in capital in excess of par value............................................... $600,000
Retained earnings............................................................................ $366,000
During the year, the following transactions occurred:
Jan 5.) Issued 20,000 shares of common stock for $15 cash per share
Jan 18.) Purchased 4000 shares of common stock as treasury stock at $14 cash per share
Mar 12.) Sold one-fourth of the treasury shares acquired January 18 for $17 per share
July 17.) Sold 600 shares of the remaining treasury stock for $12 per share
Oct 1.) Issued 5,000 shares of eight percent, $25 par valued preferred stock for $35 cash per share. These are the first preferred shares issued out of 50,000 authorized shares.
Dec. 31) Closed the net income of $170,000 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
B.) Prepare the journal entries to record the foregoing transactions and post to T-accounts(set up any additional T-accounts needed). 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 balance for the stockholders' equity accounts.
C.) Prepare the December 31 stockholders' equity section of the balance sheet.
a.
Preferred Stock | |||
Beg. bal. | 0 | ||
Oct 1 | 125,000 | ||
Bal. Dec 31 | 125,000 | ||
Paid-in Capital in Excess of Par Value: Preferred Stock | |||
Beg. bal. | 0 | ||
Oct 1 | 50,000 | ||
Bal. Dec 31 | 50,000 | ||
Common Stock | |||
Beg. bal. | 150,000 | ||
Jan 5 | 20,000 | ||
Bal. Dec 31 | 170,000 | ||
Paid-in Capital in Excess of Par Value: Common Stock | |||
Beg. bal. | 600,000 | ||
Jan 5 | 280,000 | ||
Bal. Dec 31 | 880,000 | ||
Treasury Stock | |||
Beg. bal. | 0 | Mar 12 | 14,000 |
Jan 18 | 56,000 | July 17 | 8,400 |
Bal. Dec 31 | 33,600 | ||
Paid-in Capital: Treasury Stock | |||
Beg. bal. | 0 | ||
July 17 | 1,200 | Mar 12 | 3,000 |
Bal. Dec 31 | 1,800 | ||
Retained Earnings | |||
Beg. bal. | 366,000 | ||
Dec 31 | 170,000 | ||
Bal. Dec 31 | 536,000 |
b. In the books of Cooper Corporation :
Date | Account Titles | Debit | Credit |
$ | $ | ||
Jan 5 | Cash | 300,000 | |
Common Stock | 20,000 | ||
Paid-in Capital in Excess of Par Value: Common Stock | 280,000 | ||
Jan 18 | Treasury Stock | 56,000 | |
Cash | 56,000 | ||
Mar 12 | Cash | 17,000 | |
Treasury Stock ( 1,000 x $ 14 ) | 14,000 | ||
Paid-in Capital: Treasury Stock | 3,000 | ||
July 17 | Cash | 7,200 | |
Paid-in Capital: Treasuy Stock | 1,200 | ||
Treasury Stock ( 600 x $ 14 ) | 8,400 | ||
Oct 1 | Cash | 175,000 | |
Preferred Stock | 125,000 | ||
Paid-in Capital in Excess of Par Value: Preferred Stock | 50,000 | ||
Dec 31 | Income Summary | 170,000 | |
Retained Earnings | 170,000 |
c.
Cooper
Corporation Balance Sheet ( Partial ) December 31 |
|
Stockholders Equity | |
Preferred Stock, 8%, $ 25 par, 5,000 shares issued and outstanding | $ 125,000 |
Paid-in Capital in Excess of Par Value: Preferred Stock | 50,000 |
Common Stock, $ 1 par . 170,000 issued | 170,000 |
Paid-in Capital in Excess of Par Value: Common Stock | 880,000 |
Paid-in Capital: Treasury Stock | 1,800 |
Total Paid-in Capital | $ 1,226,800 |
Retained Earnings | 536,000 |
Less: Treasury Stock, at cost | (33,600) |
Total Stockholders Equity | $ 1,729,200 |
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