In 2018, Joanna and some of her friends invested money to start a company named GIRLZ...

   
 

Transcribed Image Text:

In 2018, Joanna and some of her friends invested money to start a company named GIRLZ Corporation. The following transactions occurred during 2018. Jan 1 The corporate charter authorized 66,000 shares of 4%, $90 par value cumulative preferred stock and unlimited shares of $6 par value common stock. Jan 6 Issued 169,000 common shares at $13 per share to Elizabeth and other investors. Jan 7 Issued another 590 common shares to Elizabeth in exchange for her services in organizing the corporation. The stockholders agreed that the services were worth $11,800. Issued 4,400 preferred shares for $396,000. Jan 12 Jan 14 Nov 15 Dec 20 Issued 10,000 common shares in exchange for equipment. The fair market value of the equipment could not be readily determined, but the market price of the common stock on this date was $13 per share. The first annual dividend on preferred stock was declared. Paid the dividends declared on preferred stock. Dec Estimated income tax expense of $39,400. However, the actual amount of income tax due for this period based on tax 31 laws is determined to be $35,800. GIRLZ Corporation generated a $102,000 net income during the year. The company uses the retained earnings method to record dividends. a) Prepare the journal entries to record the above transactions in 2018. Do not enter dollar signs or commas in the input boxes. Date Jan 6 Jan 7 Jan 12 Jan 14 Nov 15 Cash Account Title and Explanation Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for cash Organization Expenses Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for services Cash Preferred Stock Issue of preferred stock for cash Equipment Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for equipment Potained Earningc 47 O 4 Debit 2197000 11800 396000 Credit 396000 Nov 15 Dec 20 Dec 31 Retained Earnings Dividends Payable Dividend declared on preferred stock Dividends Payable Cash Recording payment of dividend Income Tax Expense Deferred Income Tax Liability Income Tax Payable To record tax expense and liability GIRLZ Corporation Calculation of Retained Earnings For the Year Ended December 31, 2018 b) Prepare the statement of retained earnings for the year ended December 31, 2018. Opening Balance Add: Net Income Less: Cash Dividends - Preferred 4 Balance - December 31, 2018 4 For the Year Ended December 31, 2018 Opening Balance Add: Net Income Less: Cash Dividends - Preferred Balance - December 31, 2018 c) Prepare the shareholders' equity section of the balance sheet as at December 31, 2018. Stockholders' Equity Paid-In Capital Preferred Stock, 4% cumulative, $90 par value, 66,000 authorized, 4,400 issued and outstanding Common Stock, $6 par value, unlimited authorized, 179,590 issued and outstanding Additional Paid-In Capital Total Paid-In Capital Retained Earnings Total Stockholders' Equity GIRLZ Corporation Balance Sheet (Partial) December 31, 2018 Check In 2018, Joanna and some of her friends invested money to start a company named GIRLZ Corporation. The following transactions occurred during 2018. Jan 1 The corporate charter authorized 66,000 shares of 4%, $90 par value cumulative preferred stock and unlimited shares of $6 par value common stock. Jan 6 Issued 169,000 common shares at $13 per share to Elizabeth and other investors. Jan 7 Issued another 590 common shares to Elizabeth in exchange for her services in organizing the corporation. The stockholders agreed that the services were worth $11,800. Issued 4,400 preferred shares for $396,000. Jan 12 Jan 14 Nov 15 Dec 20 Issued 10,000 common shares in exchange for equipment. The fair market value of the equipment could not be readily determined, but the market price of the common stock on this date was $13 per share. The first annual dividend on preferred stock was declared. Paid the dividends declared on preferred stock. Dec Estimated income tax expense of $39,400. However, the actual amount of income tax due for this period based on tax 31 laws is determined to be $35,800. GIRLZ Corporation generated a $102,000 net income during the year. The company uses the retained earnings method to record dividends. a) Prepare the journal entries to record the above transactions in 2018. Do not enter dollar signs or commas in the input boxes. Date Jan 6 Jan 7 Jan 12 Jan 14 Nov 15 Cash Account Title and Explanation Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for cash Organization Expenses Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for services Cash Preferred Stock Issue of preferred stock for cash Equipment Common Stock Paid-In Capital in Excess of Par, Common Stock Issued common stock for equipment Potained Earningc 47 O 4 Debit 2197000 11800 396000 Credit 396000 Nov 15 Dec 20 Dec 31 Retained Earnings Dividends Payable Dividend declared on preferred stock Dividends Payable Cash Recording payment of dividend Income Tax Expense Deferred Income Tax Liability Income Tax Payable To record tax expense and liability GIRLZ Corporation Calculation of Retained Earnings For the Year Ended December 31, 2018 b) Prepare the statement of retained earnings for the year ended December 31, 2018. Opening Balance Add: Net Income Less: Cash Dividends - Preferred 4 Balance - December 31, 2018 4 For the Year Ended December 31, 2018 Opening Balance Add: Net Income Less: Cash Dividends - Preferred Balance - December 31, 2018 c) Prepare the shareholders' equity section of the balance sheet as at December 31, 2018. Stockholders' Equity Paid-In Capital Preferred Stock, 4% cumulative, $90 par value, 66,000 authorized, 4,400 issued and outstanding Common Stock, $6 par value, unlimited authorized, 179,590 issued and outstanding Additional Paid-In Capital Total Paid-In Capital Retained Earnings Total Stockholders' Equity GIRLZ Corporation Balance Sheet (Partial) December 31, 2018 Check