Wireless Company had the following transactions in 2016, its first year of operations Issued 20,000 shares of common stock and received equipment with a market value of $600,000. The stock has a par value of $1.00 per share, 1000 shares of $10 par value, 6% preferred stock, and collect cash. Shares were issued 3. Issued at $90. 

The data for the year ended Dec 31, 2016, follow: 

COGS Sales Revenue $84,000 186,000

Interest Revenue 5,400 

Operating expenses 44,000 2,300 

Interest Expense 

Declared dividends of $12,000. 

The preferred dividend is the 6% of par value (there is no dividend in arrears). 

Requirements: 

Calculate preferred dividend and common dividend for 2016.

a.  Journalize the issuance of common stocks. 

b. Journalize the issuance of preferred stocks. 

c. Journalize the closing entries for net income. Open and use "Income Summary" and "Retained Earnings" T-accounts for closing entries.

d. Journalize the declaration of dividends. Show the distribution between preferred and common. 

e. Calculate the ending balance of Retained Earnings after closing entries.

Answer rating: 100% (QA)

A Machinery Dr 600000 To Share Capital 200000 To premium On Shares 400000 B Cash Dr 90000 To p... View the full answer