The equity accounts of Terrell SE on January 1, 2017, were as follows.
Share Capital-Preference (9%, €50 par, cumulative,
10,000 shares authorized)..............................................................€ 400,000
Share Capital-Ordinary (€1 stated value, 2,000,000 shares authorized)......1,000,000
Share Premium-Preference............................................................100,000
Share Premium-Ordinary............................................................1,450,000
Retained Earnings.....................................................................1,816,000
Treasury Shares-Ordinary (20,000 shares)...........................................50,000
During 2017, the corporation had the following transactions and events pertaining to its equity.
Feb. 1 Issued 30,000 ordinary shares for €120,000.
Apr. 14 Sold 9,000 treasury shares-ordinary for €42,000.
Sept. 3 Issued 7,000 ordinary shares for a patent valued at €32,000.
Nov. 10 Purchased 1,000 ordinary shares for the treasury at a cost of €6,000.
Dec. 31 Determined that net income for the year was €452,000.
No dividends were declared during the year.
Instructions
(a) Journalize the transactions and the closing entry for net income.
(b) Enter the beginning balances in the accounts, and post the journal entries to the equity accounts. (Use J5 for the posting reference.)
(c) Prepare an equity section at December 31, 2017, including the disclosure of the preference dividends in arrears.