Question

Stockholders' Equity: Transactions and Balance Sheet Presentation The stockholders' equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the year: Jan. 12 Announced a 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization was increased to 300,000 shares. Mar. 31 Converted $40,000 face value of convertible bonds payable (the book value of the bonds was $46,000) to common stock. Each $1,000 bond converted to 125 shares of common stock. June 1 Acquired equipment with a fair market value of $80,000 in exchange for 500 shares of preferred stock. Sept. 1 Acquired 10,000 shares of common stock for cash at $14 per share. Oct. 12 Sold 1,500 treasury shares at $19 per share. Nov. 21 Issued 5,000 shares of common stock at $14 per share. Dec. 28 Sold 1,200 treasury shares at $9 per share. 31 Closed net income of $95,000 to the Retained Earnings account. Required • Prepare journal entries for the given transactions and post them to the T-accounts. 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 balances for the stockholders' equity accounts. • Prepare the stockholders' equity section of the balance sheet at December 31.

Where am I going wrong? I can't seem to find the stock value of anything.

Answer 1

Summit Corporation Date Account 12-Jan No entry for Stock Split Debit Credit Calculation 40,000 6,000 31-Mar Bonds Payable Premium on Bonds Payable Common Stock Paid in Capital in Excess of Par Value-Common Stock 25,000 =(40,000/1,000*125)*$5 par 21,000 -40,000+6,000-25,000 80,000 1-Jun Equipment Preferred Stock Paid in Capital in Excess of Par Value-Preferred Stock =500*$100 par 50,000 30,000 140,000 =10,000*$14 1-Sep Treasury Stock - Common Cash 140,000 28,500 12-Oct Cash Treasury Stock - Common Paid in Capital from Treasury Stock =1,500*$19 =1,500*$14 21,000 7,500 70,000 21-Nov Cash Common Stock Paid in Capital in Excess of Par Value-Common Stock =5,000*$14 =5,000*$5 par 25,000 45,000 =1,200*$9 28-Dec Cash Paid in Capital from Treasury Stock Treasury Stock - Common 10,800 6,000 16,800 =1,200*$14 95,000 31-Dec Income Summary Retained Earnings 95,000

Summit Corporation T Accounts Date Debit Date Credit Preferred Stock Op bal $ 500,000 1-Jun $ 50,000 Date Debit Date Credit Paid in Capital in Excess of Par Value-PS Op bal $ 24,000 1-Jun $ 30,000 Bal. $ 550,000 Common Stock Op bal $ 60,000 31-Mar $ 25,000 21-Nov $ 25,000 Bal. $ 54,000 Paid in Capital in Excess of Par Value-CS Op bal $ 360,000 31-Mar $ 21,000 21-Nov $ 45,000 110,000 $ Treasury Stock - Common 1-Sep $ 140,000 12-Oct $ 28-Dec $ Bal. $ 426,000 Paid in Capital from Treasury Stock 12-Oct $ 7,500 28-Dec $ 6,000 21,000 16,800 Bal. Bal. $ 1,500 $ 102,200 Retained Earnings Op bal $325,000 31-Dec $ 95,000 Bal. $ 420,000

Summit Corporation Partial Balance Sheet As of December 31 Stockholders Equity Paid in Capital Preferred Stock Common Stock Additional Paid in capital Paid in Capital in Excess of Par Value-Preferred Stock Paid in Capital in Excess of Par Value-Common Stock Paid in Capital from Treasury Stock Total Paid in Capital Retained Earnings 550,000 110,000 660,000 54,000 426,000 1,500 481,500 1,141,500 420,000 1,561,500 (102,200) 1,459,300 Less: Treasury Stock - Common Total Stockholders Equity