Share
Explore BrainMass

Vargas Corporation

A. Vargas Corporation is authorized to issue 20,000 shares of $50 par value, 10% Preferred stock and 125,000 shares of $3 par value common stock. On January 1, 2012, the ledger contained the following stockholders' equity balances.

Preferred Stock (10,000 shares) $500,000
Paid-in Capital in Excess of Par Value-Preferred 75,000
Common Stock (70,000 shares) 210,000
Paid-in Capital in Excess of Par Value-Common 700,000
Retained Earnings 300,000
During 2012, the following transactions occurred.
Feb. 1 Issued 2,000 shares of preferred stock for land having a fair market value of $125,000.
Mar. 1 Issued 1,000 shares of preferred stock for cash at $65 per share.
July 1 Issued 16,000 shares of common stock for cash at $7 per share.
Sept. 1 Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market values were preferred stock $70 and patent indeterminable.
Dec. 1 Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec. 31 Net income for the year was $260,000. No dividends were declared.

Journalize the transactions and the closing entry for net income.

Date Account/Description Debit Credit
Feb. 1

Mar. 1

July 1

Sept. 1

Dec. 1

Dec. 31

B. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J2 for the posting reference.)

Preferred Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

J2

Common Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

Paid-in Capital in Excess of Par Value-Preferred Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

J2

Paid-in Capital in Excess of Par Value-Common Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

Retained Earnings
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

VARGAS CORPORATION
C. Stockholders' equity

,

$ par value,

shares authorized,

shares issued and outstanding
$

,

$ par value,

shares authorized,

shares issued and outstanding

$

Total stockholders' equity $

Complete a stockholders' equity section at December 31, 2012.

Attachments

Solution Summary

Your tutorial is in excel (click in cells to see computations) in a schedule that maps out all the activity. Then the details are put into the grid provided (in word).

$2.19