Financial Accounting: P13-4A Mary Corporation is authorized to issue 20,000 shares

Financial Accounting

Problem 13-4A
Mary Corporation is authorized to issue 20,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $3 par value common stock. On January 1, 2012, the ledger contained the following stockholders’ equity balances:
Preferred Stock (10,000 shares) 500,000
Paid-in-Capital in Excess of Par- Preferred Stock 75,000
Common Stock (70,000 shares) 210,000
Paid-in-Capital in Excess of Par- Common Stock 700,000
Retained earnings 300,000

During 2012, the following transactions occurred.
Feb1. Issued 2,000 shares of preferred stock for land having a fair value of $125,000
Mar 1. Issued 1,000 shares of preferred stock for cash at $65 per share
July 1. Issued 16,000 shares of common stock for cash at $7 per share.
Sept 1. Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market values were preferred stock $70 and patent indeterminable.
Dec 1. Issued 8,000 shares of common stock for cash at $7.5 per share
Dec 31. Net income for the year was $260,000. No dividends were declared

Instructions:
a. Journalize the transactions and the closing entry for net income
b. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J2 for the posting reference).
c. Prepare a stockholders' equity section at December 31, 2012.
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