Question

The stockholders’ equity accounts of Castle Corporation on January 1, 2017, were as follows. Preferred Stock (8%, $48 par, cumulative, 10,000 shares authorized) $ 360,000 Common Stock ($1 stated value, 2,000,000 shares authorized) 1,050,000 Paid-in Capital in Excess of Par—Preferred Stock 150,000 Paid-in Capital in Excess of Stated Value—Common Stock 1,500,000 Retained Earnings 1,800,000 Treasury Stock (10,500 common shares) 52,500 During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity. Feb. 1 Issued 24,500 shares of common stock for $121,000. Apr. 14 Sold 5,600 shares of treasury stock—common for $33,100. Sept. 3 Issued 5,200 shares of common stock for a patent valued at $34,500. Nov. 10 Purchased 1,100 shares of common stock for the treasury at a cost of $5,800. Dec. 31 Determined that net income for the year was $485,000. No dividends were declared during the year. Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Post entries in the order of journal entries presented in the previous part.) Preferred Stock Date Explanation Ref. Debit Credit Balance Balance √ Common Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5 Paid-in Capital in Excess of Par—Preferred Stock Date Explanation Ref. Debit Credit Balance Balance √ Paid-in Capital in Excess of Stated Value—Common Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5 Paid-in Capital from Treasury Stock Date Explanation Ref. Debit Credit Balance J5 Retained Earnings Date Explanation Ref. Debit Credit Balance Balance √ J5 Treasury Stock Date Explanation Ref. Debit Credit Balance Balance √ J5 J5

Answer 1

Following are the stockholders' equity account :-

Preferred stock

			Jan 1, 2017	by Bal b/d	360000
Dec 31, 2017	to bal c/d	360000

Common stock

			Jan 1, 2017	by bal b/d	1050000
			Feb 1, 2017	by cash (24500x1)	24500
			September 3, 2017	By patent (5200x1)	5200
Dec 31, 2017	to bal c/d	1079700

Paid in capital in excess of par-preferred stock

			Jan 1, 2017	by bal b/d	150000
Dec 31, 2017	to bal c/d	150000

Paid in capital in excess of stated value - common stock

			Jan 1, 2017	by bal b/d	1500000
			Feb 1, 2017	By cash (121000-24500)	96500
			Sep 3, 2017	By patent (34500-5200)	29300
Dec 31, 2017	To bal c/d	1625800

Retained earnings

			Jan 1, 2017	by bal b/d	1800000
			Dec 31, 2017	By net profit	485000
Dec 31, 2017	To bal c/d	2285000

Treasury stock

Jan 1, 2017	to bal b/d	52500	Apr 14, 2017	by cash	28000
Nov 10, 2017	To cash	5800	Dec 31, 2017	by bal c/d	30300

Paid in capital from treasury stock

			Apr 14, 2017	by cash	5100
Dec 31, 2017	To bal c/d	5100

Note :-

Cost of 1 treasury stock = 52500/10500 = $5

Cost of 5600 treasury stock sold = 5x5600 = $28000

= Paid in capital from treasury stock = 33100-28000 = $5100.