Issuing stock and preparing the stockholders’ equity section of the balance sheet [15-20 m...

Issuing stock and preparing the stockholders’ equity section of the balance sheet [15-20 min]

Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln-Priest balance sheet reported the following stockholders’ equity:

Requirements

1. During 2012, the company completed the following selected transactions. Journalize each transaction. Explanations are not required.

a. Issued for cash 1,300 shares of preferred stock at par value.

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b. Issued for cash 2,400 shares of common stock at a price of $5 per share.

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c. Net income for the year was $74,000, and the company declared no dividends. Make the closing entry for net income.

2. Prepare the stockholders’ equity section of the Lincoln-Priest balance sheet at December 31, 2012.