Question

M & C Corporation charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the company had the following transactions in 2014, its first year of operations. • Issued 2,000 shares of common stock. Stock has par value of $1.00 per share and was issued for cash at $50.00 per share. • Issued 100 shares of $100 par value preferred stock. Shares were issued for cash at par. • Earned net income of $95,000. • Dividends of $5,000 declared and paid in cash. Required: 1. Journalize the above transactions in the books of M&C Corporation. 2. Prepare the stockholders' equity section of the balance sheet at December 31, 2014.

Answer 1

Debit -Credit $ 100000 cash I Bank common stuck Additional paid in capital $2000 498000 $ 10000 Cash / Bank Prefered Stock Additional paid in Capital $10000 Nil $ 5000 $5000 vi) Income Summare (retained counings Dividends payable (1) Dividends payable Cash $5000 5000 $ 2000 $ 10000 Stock holder's equity Paid in capital common stock Preferred stock Additional paid in Capital Paid in capital in excess of par - common stock - Preferred stock Total paid in capital Retained earnings Total stark holder's equity $980ooo 110000 90000 2000 DO