Question

CALCULATOR | | MESSAGE HY INSTRUCT Problem 11-3A The stockholders' equity accounts of Larkspur, Inc. on January 1, 2019, were as follows. Preferred Stock (896, $48 par, cumulative, 11,000 shares authorized) Common Stock ($1 stated value, 1,950,000 shares authorized) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock (11,000 common shares) 408,000 1,250,000 100,000 1,400,000 1,800,000 55,000 During 2019, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 26,000 shares of common stock for $122,000. Apr. 14 Sold 6,000 shares of treasury stock-common for $33,900. Sept. 3 Issued 5,200 shares of common stock for a patent valued at $35,000. Nov. 10 Purchased 1,100 shares of common stock for the treasury at a cost of $6,100. Dec. 31 Determined that net income for the year was $420,000 No dividends were declared during the year.

Answer 1

Journal entries:

Date	Particulars	L.F	Amount ($)	Amount ($)
2019
Feb-01	Cash		122,000
	Common Stock (26,000*1)			26,000
	Additional paid in capital-common stock (26,000*4)			96,000
	(For common stock issued)
Apr-14	Cash		33,900
	Additional paid in capital-treasury stock			3,900
	Treasury Stock (6,000*5)			30,000
	(For treasury stock sold)
Sep-03	Patent		35,000
	Common Stock (5,200*1)			5,200
	Additional paid in capital-common stock			29,800
	(For common stock issued)
Nov-10	Treasury Stock		6,100
	Cash			6,100
	(For treasury stock purchased)
Dec-31	Income summary		420,000
	Retained earnings			420,000
	(for profit earned)

General ledger:

Preferred Stock
Particulars	Amount ($)	Particulars	Amount ($)
		Opening balance	408,000
		Closing Balance	408,000
Common Stock
Particulars	Amount ($)	Particulars	Amount ($)
		Opening balance	1,250,000
		Feb-01	26,000
		Sep-03	5,200
		Closing Balance	1,281,200
Paid-in Capital in Excess of Par Value—Preferred Stock
Particulars	Amount ($)	Particulars	Amount ($)
		Opening balance	100,000
			100,000
Paid-in Capital in Excess of Stated Value—Common Stock
Particulars	Amount ($)	Particulars	Amount ($)
		Opening balance	1,400,000
		Feb-01	96,000
		Sep-03	29,800
			1,525,800
Retained Earnings
Particulars	Amount ($)	Particulars	Amount ($)
		Opening balance	1,800,000
		Dec-31	420,000
	0		2,220,000
		Closing balance	2,220,000
Treasury Stock
Particulars	Amount ($)	Particulars	Amount ($)
Opening Balance	55,000	Apr-14	30,000
Nov-10	6,100
	61,100		30,000
Closing balance	31,100
Paid-in Capital in Excess of Stated Value—Treasury Stock Stock
Particulars	Amount ($)	Particulars	Amount ($)
		Apr-14	3,900
		Closing balance	3,900

Partial Balance Sheet:

Larkspur Company
Partial Balance Sheet
For the Year Ended December 31, 2019
Paid in capital
Common Stock 1,281,200 shares issued and outstanding, $1 par	1,281,200
8% Preferred Stock 11,000 Shares authorized $48 par	408,000	1,689,200
Additional paid in capital
Paid in Capital in excess of Par-Preferred Stock	100,000
Paid in Capital in excess of Par-Common Stock	1,525,800
Paid in Capital in excess of Par-Treasury Stock	3,900	1,629,700
Add:
Retained earnings	2,220,000
Less: Treasury Stock	-31,100	2,188,900
Total stockholders equity		5,507,800