Prince Dell, Inc., was organized in 2016. At December 31, 2016, the Prince Dell balance sheet reported the following stockholders’ equity:
Prince Dell Inc.
Stockholders’ Equity
December 31,2016
Paid-in Capital | |
Preferred stock, 4%, $55 par, 650,000 shares authorized, none issued | $0 |
Common stock, $2 par, 540,000 shares authorized, 62,000 shares issued and outstanding | 124,000 |
Paid-in capital in excess of par—common | 42,000 |
Total paid-in capital | 166,000 |
Retained earnings | 28,000 |
Total Stockholders’ equity | $194,00 |
Requirements:
1. During 2017, the company completed the following selected transactions.
Journalize each transaction. Explanations are not required.
a. Issued for cash 1,500 shares of preferred stock at par value.
b. Issued for cash 2,000 shares of common stock at a price of $7 per share.
c. Net income for the year was $78,000, and the company declared no dividends.
Make the closing entry for net income.
2. Prepare the stockholders’ equity section of the Prince Dell balance sheet at December 31, 2017.
1.. | Account Title | Debit | Credit |
a. | Cash | 82500 | |
Preferred stock | 82500 | ||
1500*55 | |||
b. | Cash (2000*7) | 14000 | |
Common stock(2000*2) | 4000 | ||
Paid-in capital in excess of par—Common stock(2000*5) | 10000 | ||
c. | Net Income | 78000 | |
Retained earnings | 78000 | ||
2.. | |||
Prince Dell Inc. | |||
Stockholders’ Equity | |||
December 31,2017 | |||
Paid-in Capital | |||
Preferred stock, 4%, $55 par, 650,000 shares authorized, 1500 shares issued | 82500 | ||
Common stock, $2 par, 540,000 shares authorized, 64,000 shares issued and outstanding(124000+4000) | 128,000 | ||
Paid-in capital in excess of par—common(42000+10000) | 52,000 | ||
Total paid-in capital | 262,500 | ||
Retained earnings (28000+78000) | 106000 | ||
Total Stockholders’ equity | 368,500 |
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