Question

Problem 11-3A (Part Level Submission)

The stockholders’ equity accounts of Cullumber Company on January 1, 2019, were as follows.

Preferred Stock (8%, $48 par, cumulative, 10,000 shares authorized)		$  360,000
Common Stock ($1 stated value, 1,900,000 shares authorized)		1,000,000
Paid-in Capital in Excess of Par—Preferred Stock		100,000
Paid-in Capital in Excess of Stated Value—Common Stock		1,400,000
Retained Earnings		1,750,000
Treasury Stock (10,000 common shares)		40,000

During 2019, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb.	1		Issued 24,000 shares of common stock for $115,000.
Apr.	14		Sold 5,500 shares of treasury stock—common for $32,000.
Sept.	3		Issued 4,700 shares of common stock for a patent valued at $34,000.
Nov.	10		Purchased 1,000 shares of common stock for the treasury at a cost of $5,700.
Dec.	31		Determined that net income for the year was $400,000.

No dividends were declared during the year.

Journalize the transactions and the closing entry for net income

Answer 1

Journal entry

Date	Account and explanation	Debit	Credit
Feb 1	Cash	115000
	Common Stock		24000
	Paid in Capital in excess of stated value-common Stock		91000
Apr 14	Cash	32000
	Paid in capital from sale of treasury stock		10000
	Treasury stock (5500*4)		22000
Sep 3	Patent	34000
	Common Stock		4700
	Paid in Capital in excess of stated value-common Stock		29300
Nov 10	Treasury stock	5700
	Cash		5700
Dec 31	Income summary	400000
	Retained earnings		400000