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15-1: Equity Transactions and Statement Preparation

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
$270,000.

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.

Instructions
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.

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Attachments

Solution Summary

Equity transactions and statement preparations are completed in the attached Excel file.

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