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    Sixnut Inc: Prepare journal entries for stock transactions

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    Sixnut, Incorporated has been authorized to issue 1,000,000 shares of $1 par common stock, and
    100,000 shares of 8%, $100 par, cumulative, preferred stock. During the first six months of
    operation, the following transactions occurred related to the stock.

    Jul 1st Sold 200,000 shares of common stock for $15 per share, and 100,000
    shares of preferred stock, sold at par.

    Jul 1st Issued 100,000 shares of common stock in exchange for the following
    assets: Land $250,000
    Building 750,000
    Equipment 300,000
    Inventory 200,000
    The market value of the stock was $15 per share.

    Sep 1st Sold 100,000 shares of common stock for $20 per share.

    Oct 31st Repurchased 50,000 shares of common stock for $25 per share. Sixnut
    has elected to use the cost method to account for the treasury stock.

    Nov 30th Re-sold 20,000 shares of the treasury stock for $35 per share.

    Dec 31st Recorded net income for the first six months in the amount of $5,000,000.
    (Hint: Debit: Income Summary)

    Required: Prepare, in proper form, the journal entries required to account for the stock transactions.

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    Solution Summary

    The solution prepares journal entries for stock transactions. The recorded net income for the first six months in the amount are determined.