Question

Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, $10 par value, 13,400 shares authorized. During the year, the following selected transactions were completed: a. Sold 6,400 shares of common stock for cash at $20 per share. b. Sold 2,800 shares of common stock for cash at $25 per share. C. At year-end, the accounts reflected income of $6,300. No dividends were declared. 2. Prepare the stockholders' equity section as it should be reported on the year-end balance sheet. (Amounts to be deducted should be indicated by a minus sign.) TARRANT CORPORATION Balance Sheet (Partial) At December 31, This year Stockholders' equity Contributed capital: Total contributed capital Total stockholders' equity $

Answer 1

Answer
Journal entries :
date	Accounts & explanation	debit	credit
1	Cash a/c(6400*20)	$     1,28,000
	Common stock (6400*10)		$     64,000
	Paid in captial in excess of par value-common stock (6400*10)		$     64,000
	(To record issue of common stock)
	Cash a/c(2800*25)	$        70,000
	Common stock (2800*10)		$     28,000
	Paid in capital in excess of par value-common stock (2800*15)		$     42,000
	(To record issue of common stock)
	Net income a/c	$          6,300
	Retained earnings a/c		$       6,300
	(TO record net income transfered in retained earnings)

TARRANT CORPORATION
Balance Sheet (Partial)
At December 31, this year
Stockholders Equity
Contributed Capital:
Common stock, $10 par, 13,400 shares authorized,
9,200 shares issued and outstanding	$      92,000
(9200*$10)
Additional paid in capital -common stock	$   1,06,000
($64000+$42000)
Total Contributed Capital	$   1,98,000
Add:
Retained Earnings	$        6,300
Total Stockholders' equity		$2,04,300
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