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Journalize Transaction for Stock, Equity and Retained Earnings

Lindsay Ltd was authorized to issue an unlimited number of common shares. During January 2011, its first month of operation the following selected transactions occurred:

Jan 1. 1,000 shares were issues to the organizers of the corporation. The total value of the shares was determined to be $8,000

Jan 5. 15,000s shares were sold to various shareholders for $9.00 each

Jan 15. The board of directors declared a cash dividend of 0.50 per common share to shareholders of record on January 19, payable January 31

Jan 20. 4,000 shares were issued in an exchange for land valued at $32,000. The shares were actively trading on this date at $10.75 per share

Jan 31. Closed the income Summary account, which showed a credit balance of $110,000

Jan 31. Paid the dividends declared on January 19

Required:
a) Journalize the above transactions
b) Prepare the shareholder's equity section of the balance sheet of Lindsay Ltd at January 31,2011
c) What was the average issue price per common share?

Exercise 15-7
The December 31, 2011, shareholders equity section of the balance sheet of Maritime Inc appears below

Maritime Inc.
Shareholders Equity
December 31, 2011

Contributed capital:
Preferred shares, $4.50 cumulative,
40,000 shares authorized and issued..................................$2,000,000
Preferred shares, $12 non-cumulative,
8,000 shares authorized and issued..........................................800,000
Common Shares,400,000 shares authorized and issued.........2,000,000
Total Contributed capital............................................................4,800,000
Retained Earnings........................................................................890,000
Total Shareholders Equity.........................................................$5,690,000

Required:
All the shares were issued on January 1, 2009 (when the corporation began operations). No dividends had been declared during the first two years of operations(2009 and 2010). During 2011 the cash dividends declared and paid totaled $736,000.

a) Calculate the amount of Cash dividends paid during 2011 to each of the three classes of shares Preferred Shares Cumulative, Preferred Shares Non-Cumulative, and common shares.
b) Assuming net income earned during 2011 was $1,500,000 determine the December 31, 2010, balance in retained earnings.
c) Prepare a statement of retained earnings for the year ended December 31,2011

Exercise 15-6A

The balance sheet for the Clarke Corporation reported the following components of shareholders equity on December 31,2011:

Common shares unlisted shares authorized,
20,000 shares issued and outstanding......................460,000
Retained Earnings......................................................270,000
Total Shareholders equity..........................................$730,000

In 2012 Clarke Corporations had the following transactions affecting shareholders and the shareholder equity accounts:

Jan 5. The directors declared a $4.00 per share cash dividend payable Feb.28 to the Feb 5. Shareholders of record.

Feb 28. Paid the dividend declared on January 5th.

July 6. Sold 750 common shares at $48 per share,

Aug. 22 Sold 1,250 common shares at $34 per share

Sept 5. The directors declared a $4.00 per share cash dividend payable on Oct.28 to the Oct. 5 shareholders of record

Oct. 28 Paid the dividend declared on September 5

Dec.31 Closed the $434,000 credit balance in the income summary account.
31 Closed the Cash Dividends Accounts

Required:
a) Prepare Journal Entries to record the transactions and closings for 2012
b) Prepare a statement of retained earnings for the year ended December 31,2012
c) Prepare the shareholder's equity section of the corporation's balance sheet as of December 31,2012.

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Solution Summary

The solution journalizes the transactions for stock, equity and retained earnings.

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