A condensed balance sheet for Sharp Tax Inc. as of December 31, 2010, follows. Capital stock authorized consists of 750
Information relating to operations of the succeeding three years follows the condensed balance sheet.
Feb. 12 Accumulated depreciation was reduced by $72,000 following an income tax investigation. (Assume that this was an error that qualified as a prior-period adjustment.) Additional income tax of $22,500 for prior years was paid.
Mar. 3 Purchased 300 shares of common stock at $54 per share; treasury stock is recorded at cost, and retained earnings are appropriated equal to such costs.
Aug. 10 All the treasury stock was resold at $59 per share, and the retained earnings appropriation was canceled.
Sept. 12 By vote of the stockholders, each share of the common stock was exchanged by the corporation for four shares of no-par common stock with a stated value of $15.
1. Make the journal entries to record these transactions for the 3-year period ended December 31, 2013. (Assume that revenues and expenses were closed to a temporary account, Income Summary, at the end of each year. Use this account to complete the closing process.)
2. Prepare the Stockholders' Equity section of the balance sheet as it would appear at the end of 2011, 2012, and 2013.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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