Question

After purchasing the five venues in June 2012, Front Row Entertainment needed additional cash to renovate and operate these venues. While the company had successfully borrowed money before (from bank loans as well as from the issuance of bonds), it could not find a lender willing to invest in the business due to the large amount of debt that the company currently has on its balance sheet.
With debt financing out of the question, Front Row Entertainment considers its other options. The name of an old college friend, Steve Trotter, immediately came to Cam and Anna’s mind. Steve had previous work experience in the retail industry and had expressed a desire to manage Front Row Entertainment’s current merchandising operations (the sale of DVDs). His vision was to expand the operations to include apparel (t-shirts, hats, etc.) and other items (such as bobble-head dolls of the artists). In addition, several other family members had expressed an interest in investing in the company.
Front Row was authorized to issue 25,000 shares of its $1 par common stock. On January 1, 2011, it had previously issued Cam and Anna 8,000 shares each for $1 per share. Front Row Entertainment was also authorized to issue 20,000 shares of 8 percent, $50 par preferred stock.
The following transactions occurred during the remainder of 2012.
June 15 Issued 2,000 shares of $1 par common stock to Steve for $20 per share.
July 1 Issued 3,000 shares of $50 preferred stock to family members for $75 per share.
10 Repurchased 700 common shares at $16 per share.
Aug. 5 The board of directors declared a $25,000 dividend to all shareholders of record on August 31, 2012. The dividend will be paid on Sept. 15, 2012.
Sept. 15 The $25,000 dividend was paid.
Dec. 15 300 of the treasury shares were reissued at $22 per share.
Front Row Entertainment had $53,250 of retained earnings at December 31, 2012.

Required:
1. Prepare the journal entries to record the above transactions.
2. Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.


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  • CreatedSeptember 22, 2015
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