Corporations: Organization and Capital Stock Transactions

DeLong Corporation was organized on January 1, 2020. It is authorized to issue 10,000 shares of 8%, $100 per value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year.

Jan. 10Issued 80,000 shares of common stock for cash at $4 per share
Mar. 1Issued 5,000 shares of preferred stock for cash at $105 per share
Apr. 1Issued 24,000 shares of common stock for land. The asking price of the land was $90,000. The fair value for the land was $85,000.
May 1Issued 80,000 shares of common stock for cash at $4.50 per share
Aug. 1Issued 10,000 shares of common stock to attorneys in payment of their bill or $30,000 for services performed in helping the company organize.
Sept. 1Issued 10,000 shares of common stock for cash at $5 per share
Nov. 1Issued 1,000 shares of preferred stock for cash at $109 per share

Instruction

  1. Journalize the transactions
  2. Post to the stockholders'equity accounts.
  3. Prepare the paid-in capital section of stockholders'equity at December 31, 2020.

Fechter Corporation had the following stockholders equity accounts on January 1, 2019: Common Stock ($5 par) $50,000, Paid-in Capital in Excess of Par-Common Stock $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury stock transactions

Mar. 1Purchased 5,000 shares at $8 per share
June 1Sold 1,000 shares at $12 per share.
Sept. 1Sold 2,000 shares at $10 per share.
Dec. 1Sold 1,000 shares at $7 per share.

Fechter Corporation uses the cost method of accounting for treasury stock. In 2020,the company reported net income of $30,000

Instruction

  1. Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income.
  2. Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. Post toe these accounts using J10 as the posting reference..
  3. Prepare the stockholders' equity section for Fechter Corporation at December 31, 2020.

The stockholders equity accounts of Castle Corporation on January 1, 2020, were as follows

Preferred Stock (8%, $50 par, 10,000 shares authorized)$400,000
Common Stock ($1 stated value, 2,000,000 shares authorized)1,000,000
Paid-in Capital in Excess of Par-Preferred Stock100,000
Paid-in Capital in Excess of Stated Value-Common Stock1,450,000
Retained Earnings1,816,000
Treasury Stock (10,000 common shares)50,000

During 2020, the corporation had the following transactions and events pertaining to its stockholder' equity.

Feb. 1Issued 25,000 shares of common stock for $120,000.
Apr. 14Sold 6,000 shares of treasury stock - common for $33,000.
Sept. 3Issued 5,000 shares of common stock for a patent valued at $35,000..
Nov. 10Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31Determined that net income for the year was $452,000.

No dividends were declared during the year.

Instruction

  1. Journalize the transactions and the closing entry for net income
  2. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J5 for the posting reference.)
  3. Prepare the stockholders' equity section at December 31, 2020.

Peck Corporation is authorized to issue 20,000 shares of $50 par value, 10% preferred-stock and 125,000 shares of $5 par value common stock. On January 1, 2019, the ledger contained the following stockholders equity balances

Preferred Stock (10,000 shares)$500,000
Paid-in Capital in Excess of Par-Preferred Stock75,000
Common Stock (70,000 shares)350,000
Paid-in Capital in Excess of Par-Common Stock700,000
Retained Earnings300,000
During 2020, the following transactions occurred.
Feb. 1Issued 2,000 shares of preferred stock for land having a fair value of $120,000
Mar. 1Issued 1,000 shares of preferred stock for cash at $65 per share.
July 1Issued 16,000 shares of common stock for cash at $7 per share.
Sept. 1Issued 400 shares of preferred stock for a patent. The asking price for the patent was $30,000. Market price for the preferred stock was $70 and the fair value for the parent was indeterminable.
Dec. 1Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec. 31Net income for the year was $260,000. No dividends were declared

Instruction

  1. Journalize the transactions and the closing entry for net income
  2. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J2 for the posting reference.)
  3. Prepare the stockholders' equity section at December 31, 2020.

The following stockholders equity accounts arranged alphabetically are in the ledger of Galindo Corporation at December 31, 2020.

Common Stock ($5 stated value)$2,000,000
Paid-in Capital from Treasury Stock10,000
Paid-in Capital in Excess of Par-Preferred Stock679,000
Paid-in Capital in Excess of Stated Value-Common Stock1,600,000
Preferred Stock (8%, $50 par)$120,000
Retained Earnings1,748,000
Treasury Stock (10,000 common shares)130,000

Instruction

Prepare the stockholders' equity section at December 31, 2020.

Irwin Corporation has been authorized to isue 20,000 shares of $100 par value, 10% preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $2,50 stated value to the common stock. At December 31, 2020, the ledger contained the following balances pertaining to stockholders equity.

Preferred Stock$120,000
Paid-in Capital in Excess of Par-Preferred Stock20,000
Common Stock1,000,000
Paid-in Capital in Excess of Stated Value-Common Stock1,800,000
Treasury Stock (1,000 common shares)11,000
Paid-in Capital from Treasury Stock1,500
Retained Earnings82,000
The preferred stock was issued for land having a fair value of $140,000. All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for treasury at per shares cost of $11. In December, 500 shares of treasury stock were sold for $14 per shares. No dividends were declared in 2020

Instruction

  1. prepare the journal entries for the
    1. Issuance of preferred stock for land.
    2. Issuance of common stock for cash
    3. Purchase of common treasury stock for cash.
    4. Sale of treasury stock for cash
  2. Prepare the stockholders' equity section at December 31, 2020.

Andrea has prepared the following list of statements about corporations

  1. A corporation is an entity separate and district from its owners.
  2. As a legal entity, a corporation has most of the rights and privileges of a person.
  3. Most of the largest U.S. corporation are privately held corporations.
  4. Companies may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued.
  5. The net income of a corporation is not taxed as a separate entity.
  6. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts.
  7. The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders.
  8. The board of directors of a corporation legally owns the corporation.
  9. The chief accounting officer of a corporation is the controller.
  10. Corporations are subject to fewer state and federal regulations than partnerships or proprietorships

Instructions

Identify each statement as true or false. if false, indicates how to correct the statement

During its first year of operations, Foyle Corporation had the following transactions pertaining to its common stock.

Jan. 10Issued 70,000 shares for cash at $5 per share
July 1Issued 40,000 shares for cash at $7 per share.

Instruction

  1. Journalize the transactions, assuming that the common stock has a par value of $5 per share.
  2. Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.

Osage Corporation issued 2,000 shares of stock.

Instruction

  1. The stock had a par value of $5 per share and was issued for a total of $52,000.
  2. the stock had a stated value of $5 per share and was issued for a total of $52,000.
  3. The stock had no par or stated value and was issued for a total of $52,000.
  4. the stock had a par value of $5 per share and was issued to attorneys for services during incorporation valued at $52,000.
  5. The stock had a par value of 45 per share and was issued for land worth $52,000.

Quay Co. had the following transactions during the current period.

Mar. 2Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for $30,000 for services performed in helping the company to incorporate.
June 12Issued 60,000 shares of $5 par value common stock for cash of $375,000.
July 11Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share
Nov. 28Purchased 2,000 shares of treasury stock for $80,000.

Instruction

Journalize the transactions

 
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