Question

PART A-Record the following 2018 transctions for the Sears Corporation in the journal. Additional information you will need: when Sears began operations several years ago, they were authorized to issue 200,000 shares of 7%, $100 par value preferred stock and 6,000,000 shares of $4 par value common stock.

Jan.	1	Issued 500,000 shares of common stock for cash at $11 per share.
Feb.	2	Issued 30,000 shares of preferred stock for cash at $105 per share.
Mar.	3	Declared a cash dividend on the preferred stock $385,000.
Apr.	4	Discovered a $13,000 overstatement of 2015 depreciation.
May	5	Paid the cash dividend declared of March 3.
June	6	Issued 4,000 shares of common stock for land that was advertised for sale at $51,000. The stock market price of the stock is $15 per share.
Sept.	9	Sears purchased 8,000 shares of its own common stock at $14 per share.
Oct.	10	Sold 3,000 shares of treasury stock for $18 per share
Nov.	11	Declared a $0.60 cash dividend per share on common stock for a total of $896,400.
Dec.	31	Record the net income for the year, $950,000.

PART B. Based on the Sears Corp.partial trial balance below, prepare (a) a retained earnings statement for the year and (b) a stockholder’s equity section at December 31, 2018. You may need information from A to complete this section.

        Sears Corporation

Adjusted Trial Balance-partial

December 31, 2018

                                                                                                                                                                      

		Debit		Credit
Preferred Stock.......................................................................           Common Stock........................................................................           Paid-in-capital in excess of par value-Preferred......................           Paid-in-capital in excess of par value-Common......................           Retained Earnings...................................................................           Cash Dividends-Preferred Stock............................................           Cash Dividends-Common Stock.............................................           Treasury Stock (5,000 shares).................................................           Paid-in-capital from Treasury Stock........................................           *The beginning Retained Earnings balance is $3,750,000, then adjusted for the prior period adjustment		385,000    896,400      70,000		5,500,000   5,976,000    180,000 4,952,000 3,763,000* 12,000

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Jan-01	Cash (5,00,000 X $11)	$     55,00,000
	Common stock (5,00,000 X $4)		$ 20,00,000
	Paid-in-capital in excess of par, Common stock		$ 35,00,000
	(Being common shares issued)
Feb-02	Cash (30,000 X $105)	$     31,50,000
	Preferred stock (30,000 X $100)		$ 30,00,000
	Paid-in-capital in excess of par, Preferred stock		$   1,50,000
	(Being Preferred shares issued)
Mar-03	Cash Dividends - Preferred stock	$       3,85,000
	Cash Dividend Payable		$   3,85,000
	(Being Cash dividend payable recorded)
Apr-04	Retained earnings	$           13,000
	Accumulated depreciation		$       13,000
May-05	Cash Dividend Payable	$       3,85,000
	Cash		$   3,85,000
	(Being Cash dividend paid)
Jun-06	Cash	$           51,000
	Common stock (4,000 X $4)		$       16,000
	Paid-in-capital in excess of par, Common stock		$       35,000
	(Being common shares issued)
Sep-09	Treasury stock (8,000 X $14)	$       1,12,000
	Cash		$   1,12,000
	(Being Treasury stock issued)
Oct-10	Cash (3,000 X $18)	$           54,000
	Treasury stock (3,000 X $14)		$       42,000
	Paid-in-capital in excess of par, Treasury stock		$       12,000
	(Being Treasury stock sold)
Nov-11	Cash Dividends - Common stock	$       8,96,400
	Cash Dividend Payable		$   8,96,400
	(Being Cash dividend payable recorded)
Dec-31	Net Income	$       9,50,000
	Retained earnings		$   9,50,000
Sears Corporations
Statement of Retained Earnings
For the year ended December 31, 2018
	Retained Earnings, January 1, 2018	$     37,50,000
Less:	Accumulated depreciation	$           13,000
	Adjusted amount	$     37,37,000
Add:	Net Income	$       9,50,000
		$     46,87,000
Less:	Cash dividend declared - Preferred stock	$       3,85,000
Less:	Cash dividend declared - Common stock	$       8,96,400
	Retained Earnings, December 31, 2018	$     34,05,600
Sears Corporations
Statement of Stockholder's equity
For the year ended December 31, 2018
	Contributed Capital
Add:	Preferred stock - $100 par value 200000 shares authorizes, 55,000 shares issued and outstanding	$     55,00,000
	Paid in capital in excess of par value - Preferred stock	$       1,80,000
Add:	Common stock - $4 par value 6000000 shares authorizes, 1494000 shares issued and outstanding	$     59,76,000
Add:	Paid in capital in excess of par value - Common stock	$     49,52,000
Add:	Paid in capital in excess of par value -Treasury Stock	$           12,000
	Total Contributed Capital	$ 1,66,20,000
Add:	Retained earnings	$     34,05,600
	Total Stockholder's equity	$ 2,00,25,600