Question: Reconstruct journal Entries At the end of its first year

Reconstruct journal Entries At the end of its first year of operations, Leo Company lists the following accounts and ending account balances related to stock transactions and dividends:
During the first year, the following events occurred:
1. Subscription contracts were entered into for common stock at $9 per share and preferred stock at $112 per share. Common stock subscription required a $2-per-share down payment. Preferred stock subscriptions required no down payment. Shares (either common or preferred) were issued to subscribers upon full payment.
2. One thousand shares of common stock were sold for $11 per share, and the stock was issued to shareholders.
3. Equipment with an appraised value of $69,000 was acquired by issuing 600 shares of preferred stock. The appraised value of the equipment was used to record the transaction.
4. Net income of $30,000 was closed to Retained Earnings from Income Summary at the end of the year.
5. Dividends of $8 per share on all the preferred stock outstanding and $1 per share on all the common stock out-standing were distributed at the end of the year (the company debited Retained Earnings and credited Cash for each dividend).
On the basis of the preceding information, reconstruct all the journal entries that the company made to record the stock transactions, net income and dividends. It may be helpful to begin by using T-accounts and entering the ending balances.

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  • CreatedOctober 05, 2015
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