1. (Equity Transactions and Statement Preparation) On January 5, 2003, Drabek
Corporation received a charter granting the right to issue 5,000 shares of $100 par
value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $5
par value common stock. It then completed these transactions.
Jan. 11 Issued 20,000 shares of common stock at $16 per share.
Fed 1 Issued to Robb Nen Corp. 4,000 shares of preferred stock
for the following assets: machinery with a fair market
value of $50,000; a factory building with a fair market
value of $110,000; and land with an appraised value of
Jul 29 Purchased 1,800 shares of common stock at $19 per
share. (Use cost method.)
Aug. 10 Sold the 1,800 treasury shares at $14 per share.
Dec 31 Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend.
Dec 31 Closed the Income Summary account. There was a $175,700 net income.
a. Record the journal entries for the transactions listed above.
b. Prepare the stockholders' equity section of Drabek Corporation's balance sheet as of December 31, 2003.
Equity transactions and statement preparations are completed in the attached Excel file.