Issuance of, and Dividends to, Common and Preferred Stock; Reporting of Stockholders’ Equity

Barton Corporation began operations on January 1, 2018. The following transactions relating to stockholders’ equity occurred in the first two years of the company’s operations.

Required

1. Prepare journal entries to record these transactions.

2. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2018 and 2019.

3. Prepare a table showing dividend allocations for 2018 and 2019 assuming Barton declares the following cash dividends: 2018, $50,000, and 2019, $300,000.

4. Prepare the January 2, 2018, entry for issuance of 200,000 shares of common stock for $12 cash per share if

   1. Common stock is no-par stock without a stated value.

   2. Common stock is no-par stock with a stated value of $10 per share.

PLANNING THE SOLUTION

• Record journal entries for the transactions for 2018 and 2019.

• Determine the balances for the 2018 and 2019 equity accounts for the balance sheet.

• Prepare the contributed capital portion of the 2018 and 2019 balance sheets.

• Prepare a table similar to Exhibit 13.8 showing dividend allocations for 2018 and 2019.

• Record the issuance of common stock under both specifications of no-par stock.

 

Transcribed Image Text:

Jan. 1 2 3 Authorized the issuance of 2 million shares of $5 par value common stock and 100,000 shares of $100 par value, 10% cumulative preferred stock. Issued 200,000 shares of common stock for $12 cash per share. Issued 100,000 shares of common stock in exchange for a building valued at $820,000 and merchandise inventory valued at $380,000. 4 Paid $10,000 cash to the company's founders for organization activities. 5 Issued 12,000 shares of preferred stock for $110 cash per share. Jan. 1 2 3 Authorized the issuance of 2 million shares of $5 par value common stock and 100,000 shares of $100 par value, 10% cumulative preferred stock. Issued 200,000 shares of common stock for $12 cash per share. Issued 100,000 shares of common stock in exchange for a building valued at $820,000 and merchandise inventory valued at $380,000. 4 Paid $10,000 cash to the company's founders for organization activities. 5 Issued 12,000 shares of preferred stock for $110 cash per share.

Answer rating: 100% (QA)

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