Question: Twin Lakes incorporated on April 1 2015 and was authorized

Twin Lakes incorporated on April 1, 2015, and was authorized to issue 100,000 shares of $5 par value common stock and 10,000 shares of $8, no-par preferred stock. During the remainder of 2015, the company entered into the following transactions:
1. Issued 25,000 shares of common stock in exchange for $500,000 in cash.
2. Issued 5,000 shares of preferred stock in exchange for $60,000 in cash.
3. Purchased 3,000 common shares for $15 per share and held them in the form of treasury stock.
4. Sold 1,000 treasury shares for $18 per share on the open market.
5. Issued 1,000 treasury shares to executives who exercised stock options for a reduced price of $5 per share.
The company entered into no other transactions that affected shareholders’ equity during 2015.
a. Prepare entries for each of the transactions.
b. Assume that Twin Lakes generated $500,000 in net income in 2015 and did not declare any dividends during 2015. Prepare the shareholders’ equity section of the balance sheet as of December 31, 2015.

View Solution:

Sale on SolutionInn
  • CreatedAugust 19, 2014
  • Files Included
Post your question