Sanmartini Van Lines, Ltd. began operations at the beginning of

Sanmartini Van Lines, Ltd. began operations at the beginning of the current year and engaged in the following transactions affecting the stockholders’ equity section of its current balance sheet. The company has 1,000,000 shares authorized for each common and preferred stock.
1. Issued 500,000 shares of its $ 2 par value common stock at $ 64 per share. The underwriter charged a 1% fee for issuing the shares.
2. Issued 100,000 shares of $ 4.50 par value 7% preferred stock at $ 120 per share. These shares were privately placed and Sanmartini did not pay any stock issue costs.
3. Purchased 120,000 shares of common stock at $ 70 per share.
4. Declared a $ 75,000 dividend for the first half of the year. (The declarations should be recorded separately for the common and the preferred shares.)
5. Sold 45,000 of the treasury shares at $ 60 per share.
6. Paid the cash dividends.
7. Declared a $ 75,000 cash dividend for the second half of the year. (The declarations should be recorded separately for the common and the preferred shares.)
8. Reported net income of $ 9,879,455 for the current year.
9. Closed out all dividends accounts.
Required
a. Prepare all journal entries required to record the transactions listed above.
b. Construct the shareholders’ equity section for the year- end balance sheet as well as the relevant t- accounts.
Common Stock
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...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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