The stockholders equity section of McLean Inc. at the beginning of the current year appears below. Common
Question:
The stockholders’ equity section of McLean Inc. at the beginning of the current year appears below.
Common stock, $10 par value, authorized 1,000,000
shares, 300,000 shares issued and outstanding .... $3,000,000
Paid-in capital in excess of par ........... 600,000
Retained earnings ................. 570,000
During the current year the following transactions occurred.
1. The company sold to the public a $200,000, 10% bond issue at 102. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $30 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.
2. At the end of the year, 80% of the warrants in (1) had been exercised, and the remaining were outstanding and in good standing.
Instructions
(a) Prepare general journal entries for the current year to record the transactions listed above.
(b) Prepare the stockholders’ equity section of the balance sheet at the end of the current year. Assume that retained earnings at the end of the current year is $750,000.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 1 Cash 200000 X 102 204000 Discount on Bonds Payable 11692 Bonds Payable 200000 Paidin Capital x S...View the full answer
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
