Twin Lakes incorporated on April 1, 2018, and was authorized to issue 100,000 shares of $5 par
Question:
Twin Lakes incorporated on April 1, 2018, 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 2018, 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 2018.
a. Prepare entries for each of the transactions.
b. Assume that Twin Lakes generated $500,000 in net income in 2018 and did not declare any dividends during 2018. Prepare the shareholders’ equity section of the balance sheet as of December 31, 2018.
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... 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,...
Step by Step Answer:
a 1 Cash A 500000 Common Stock SE 125000 Additional PaidIn Capital SE 375000 Issued common stock 125...View the full answer
