Question

The stockholders' equity section of Thomas Corporation's balance sheet at December 31, 2018, appears below: Preferred Stock, 6%, $15 stated value, 50,000 shares authorized; 10,000 issued and outstanding Paid-in capital in excess of stated value-preferred stock Common stock, $10 par value, 400,000 shares authorized; 250,000 issued and outstanding 150,000 30.000 2,500,000 Paid-in capital in excess of par value-common stock Retained earnings 1,200,000 600,000 During 2019, the following stock transactions occurred: Jan. 18 Issued 5,000 shares of common stock at $30 per share. Apr. 20 Purchased 20,000 shares of Thomas Corporation's common stock at $24 per share. June 15 Issued 1,000 shares of preferred stock at $20 per share. Oct. 1 Declared the preferred stock cash dividend. Oct. 1 Declared a $0.41 per share cash dividend to common stockholders of record on October 15. Dec. 1 Paid both dividends declared on October 1. Net Income for the year was $100,000. Requirements: (a) Enter beginning balances in ledger accounts. (b) Prepare the journal entries to record the above transactions. (c) Post the entries to the ledger T-accounts. Add accounts as needed. (d) Calculate the updated Retained Earnings balance. e) Prepare the 2019 stockholders' equity section of the Balance Sheet for Thomas Corporation.

Answer 1

a. & c. :

Preferred Stock
		Beg. bal.	150,000
		June 15	15,000
		End. bal.	165,000
Paid-in Capital in Excess of Stated Value: Preferred Stock
		Beg. bal.	30,000
		June 15	5,000
		End. bal.	35,000
Common Stock
		Beg. bal.	2,500,000
		Jan 18	50,000
		End. bal.	2,550,000
Paid-in Capital in Excess of Par Value: Common Stock
		Beg. bal.	1,200,000
		Jan 18	100,000
		End. bal.	1,300,000
Treasury Stock
Beg. bal.	0
Apr 20	480,000
End. bal.	480,000
Retained Earnings
Dec 31	106,250	Beg. bal.	600,000
		Dec 31	100,000
		End. bal	593,750

b. In the books of Thomas Corporation :

Date	Account Titles	Debit	Credit
2019		$	$
January 18	Cash	150,000
	Common Stock		50,000
	Paid-in Capital in Excess of Par Value: Common Stock		100,000
April 20	Treasury Stock	480,000
	Cash		480,000
June 15	Cash	20,000
	Preferred Stock		15,000
	Paid-in Capital in Excess of Stated Value: Preferred Stock		5,000
Oct 1	Dividends	9,900
	Dividends Payable: Preferred Stock		9,900
Oct 1	Dividends	96,350
	Dividends Payable: Common Stock		96,350
Dec 1	Dividends Payable: Preferred Stock	9,900
	Dividends Payable: Common Stock	96,350
	Cash		106,250
Dec 31	Income Summary	100,000
	Retained Earnings		100,000
Dec 31	Retained Earnings	106,250
	Dividends		106,250

d.

Thomas Corporation Balance Sheet ( Partial ) December 31, 2019
Stockholders Equity
Preferred Stock	$ 165,000
Paid-in Capital in Excess of Stated Value: Preferred Stock	35,000
Common Stock	2,550,000
Paid-in Capital in Excess of Par Value : Common Stock	1,300,000
Retained Earnings	593,750
Total Capital	4,643,750
Less: Treasury Stock ( at cost )	(480,000)
Total Stockholders' Equity	4,163,750