Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. When the company began on July 1, 2018, Tony and Suzie each purchased 10,000 shares of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during 2020, its third year of operations: July 2 Issue an additional 110,000 shares of common stock for $10 per share. September 10 Repurchase 11,000 shares of its own common stock (i.e., treasury stock) for $13 per share. November 15 Reissue 5,500 shares of treasury stock at $14 per share. December 1 Declare a cash dividend on its common stock of $124,500 ($1 per share) to all stockholders of record on December 15. December 31 Pay the cash dividend declared on December 1.
1. Record each of these transactions.
2. Great Adventures has net income of $148,000 in 2020. Retained earnings at the beginning of 2020 was $138,000. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2020.
1.
Date | Account Titles and Explanation | Debit | Credit |
Jul. 2, 2020 | Cash (110000 x $10) | 1100000 | |
Common stock (110000 x $1) | 110000 | ||
Paid-in capital in excess of par-common | 990000 | ||
(To record issuance of common stock) | |||
Sep. 10, 2020 | Treasury stock (11000 x $13) | 143000 | |
Cash | 143000 | ||
(To record purchase of treasury stock) | |||
Nov. 15, 2020 | Cash (5500 x $14) | 77000 | |
Treasury stock (5500 x $13) | 71500 | ||
Paid -in capital from treasury stock | 5500 | ||
(To record re-issue of treasury stock) | |||
Dec. 1, 2020 | Dividends | 124500 | |
Dividends payable | 124500 | ||
(To record declaration of dividends on common stock) | |||
Dec. 31, 2020 | Dividends payable | 124500 | |
Cash | 124500 | ||
(To record payment of dividend) |
2.
Great Adventures | |
Balance Sheet (Partial) | |
As of December 31, 2020 | |
Stockholders' Equity: | |
Common stock ($20000 + 110000) | 130000 |
Paid-in capital in excess of par-common | 990000 |
Paid-in capital from treasury stock | 5500 |
Total paid-in capital | 1125500 |
Retained earnings ($138000 + 148000 - 124500) | 161500 |
Less: Treasury stock | -71500 |
Total stockholders' equity | 1215500 |
Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they...
Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and...
Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and...
Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and...
Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and...
Great Adventures Problem 10-1 The following information applies to the questions displayed below.j Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they necd moncy to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzic first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends...
Required information Great Adventures Problem AP10-1 {The following information applies to the questions displayed below) of 2 Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool, Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close...
Required Informetion Pen aof2 (The folowg witormation apples to the questions displayed below) Tony and Suzie have purchased land fora new camp. Now they need money to bulld the cabins, diring facity, a ropes course, and an outdoor swimming poot Tony and Suze first checked with Summit Bank to see ir they could borrow an adaitional S1 milion, but unfortunately the bank tumed them down as too nsiky Undetened, they promoted their idea to close friends they had made through...
The following information applies to the questions dsplayed below/ Tony and Suhe punchased land costing $500.000 for a new camp in January 2020 Now they need money 1o build the cebins, diing faclity a ropes course, ond an ouadoor swming pool Tony and Sue r checked weh Sument Benk to see feey When the company began on July t 2018, Tony and Suze each purchased 12,500 shares of $1 par velue comon snock at St per share The ollwing teacsions...
3 Tony and Suzie graduate from college in May 2021 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they’ll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a...
Tony and Suzie graduate from college in May 2018 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes...