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Jajoo Corp. - Journal Entries

The stockholders equity accounts of Jajoo corp on Jan.1,2006 were as follows.
Preferred Stock (10%,$100 par noncumulative, 5,000 shares authorized)=$300,000
Common Stock ($5 stated value, 300,000 shares authorized)=$1,000,000
Paid in capital in excess of par value preferred stock=$20,000
Paid in capital in excess of stated value common stock=$425,000
Retained Earnings Treasury stock-common($5,000 shares)=$40,000

During 2006, the corporation had the following transactions and events pertaining to its stockholders equity.

Feb.1 Issued 3,000 shares of common stock for $25,000.
March 20 Purchased 1,500 additional shares of common treasury stock at $8 per share
June 14 Sold 4,000 shares of treasury stock common for $36,000
Sept 3 Issued 2,000 shares of common stock for a patent valued at $17,000
Dec 31 Determined that net income for the year was $340,000.

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.
c. Prepare a stockholders equity section at Dec 31, 2006
d. Compute the book value per share of common stock at Dec 31, 2006(round to two decimals)

Solution Preview

Instructions:
a. Journalize the transactions and the closing entry for net income.

Feb. 1 Cash 25,000
Common Stock 15,000
Paid in capital in excess of stated value common stock 10,000
(3,000 x $5 = $15,000)

Mar. 20 Treasury Stock 12,000
Cash 12,000
(1,500 shares x $8 = $12,000)

June 14 Cash 36,000
Treasury Stock 32,000
Paid in capital in excess of treasury stock 4,000

Sept. 3 Patent 17,000
Common Stock 10,000
Paid in capital in excess of stated value common stock 7,000
(2,000 x $5 = $10,000)

Dec. 31 Income Summary 340,000
Retained Earnings 340,000

b. enter the beginning balances in ...

Solution Summary

This solution is comprised of journal entries, stockholders equity accounts, and book value per share of Jajoo's common stock.

$2.19