Question

4 5 Problem Murray Corporation started operations in 2018. It only has one class of stock - common stock with a $5 par value. It's authorized to issue 50,000 shares of stock. Below are the following transactions in 2018 and 2019 that affected its stockholder's equity accounts. 2018 Jan. 2 Issued 30,000 shares of common stock (par $5) for $190,000. Mar. 20 Issued 10,000 shares of common stock (par $5) in exchange for a building and land. The building is valued at $45,000 and the land at 35,000. Dec. 31 Closed the $24,500 credit balance (from net income) in the Income Summary to Retained Earnings. 2013 Jan. 5 Mar. 1 Apr. 5 Jun. 20 Sep. 15 Dec. 31 2019 Purchased 5,000 shares of its own stock at $10 cash per share. Directors declared a $0.50 per share cash dividend payable on April 5 to the March 20 stockholders of record. Paid the dividend declared on March 1. Sold 1,200 of its treasury shares at $12.50 cash per share. Sold 1,500 of its treasury shares at $7 cash per share Closed the $32,000 credit balance (from net income) in the Income Summary account to Retained Earnings 24 Required 1 Prepare the journal entries to record each of these transactions. Calculate the ending balance in Retained Earnings for both 2018 and 2019. Hint: Create a T-Account for Retained Earnings and Post all the transactions affecting R.E. each year. Prepare the stockholder's equity section of the company's balance sheet as of 12/31/2019. I've prepared the 2018 one for you below for formatting/check figures. Hint: for 2019 you will need to add in the effects of treasury stock. Stockholder's equity section of Balance Sheet as of 12/31/18 Common Stock-$5 par; 50,000 shares authorized, 40,000 issued 200,000 70,000 24,500 Paid in capital in excess of par value, common stock Retained Earnings Less cost of treasury stock Total Stockholders' equity $ 294,500 Ch. 13 Excel Instructions CH. 13 Excel Work

Answer 1

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2018	Particulars	Debit $	Credit $
02 January 2018	Bank A/c Dr	1,90,000.00
	To Allotement A/c                  (30000*5)		1,50,000.00
	To Security Premium A/c		40,000.00
	Being Share Alloted
	Share Allotemnt A/c	1,50,000.00
	To Share Capital A/c		1,50,000.00
	Being Share Transferred to Share Capital
20-Mar-18	Builind A/c	45000
	Land A/c	35000
	To Share Capital A/c		50000
	To Security Premimum		40000
31-Dec-18	Profit Loss A/c Dr	24500
	Scurity Premimum	80,000.00
	To Reserve & Surplus A/c		104500
	Being Profit Transferred to Reserve & Surplus
Share Outstanding		Balance Out standing in Reserve & Surplus
02-Jan-18	30,000.00	Security Premimum	40,000.00
20-Mar-18	10,000.00	Security Premimum	40,000.00
Total Share Outstanding	40,000.00	Profit for the period	24,500.00
		Total T/f to Reseved & Surplus	1,04,500.00
2019	Particulars	Debit $	Credit $
05-Jan-19	Buy Back of Share A/c	25000
	Security Premimum A/c	25000
	To Cash		50000
	Being Share buy back @ 10 each
	No Entry for Declaration of Dividend
05-Apr-19	Dividend A/c                  (40000*.5)	20000
	To cash		20000
	Being Dividend declared and same is paid @ .5 per share for 40000 outstanding Share as on march 2019
20-Jun-19	Bank A/c	15000
	To Treasury Share		15000
	Being 1200 share Sold which is held for invesment purpose @12.5
15-Sep-19	Bank A/c	10500
	To Treasury Share		10500
	Being 1500 share Sold which is held for invesment purpose @7
31-Dec-19	Profit Loss A/c Dr	32000
	To Reserve & Surplus A/c		32000
	Being Profit Transferred to Reserve & Surplus
Share Outstanding		Balance Out standing in Reserve & Surplus
opening o/s	40,000.00	Security premimum paid	-25000
Buyback	-25,000.00	Profit for the period	32000
Closing O/s	15,000.00	Total T/f to Reseved & Surplus	7,000.00