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A&K Corporation was established in 2016. A&K has authorized 50,000 shares of common stock, par value...

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Accounting

A&K Corporation was established in 2016. A&K hasauthorized 50,000 shares of common stock, par value $1 per share,and 10,000 authorized shares of 9% preferred stock, par value $20per share. Net Income for 2016 was $245,000. The followingtransactions took place during 2016: January 1 Issued 40,000 sharesof common stock for cash at $30 per share. February 1 Issued 7,000shares of preferred stock for cash of $60 per share. June 1Repurchased 8,000 shares of L&D common stock at $25 per share.August 1 Reissued 1,000 shares of the treasury stock at $26 pershare. December 1 Declared cash dividends on Common Stock onlytotaling $65,000 to be paid on January 15, 2017 to owners on recordas of December 31, 2016. Required: Please show calculationsa)Prepare journal entries for each of the above transactions. b)Calculate Ending Retained Earnings c.)Prepare the Stockholders'Equity section of the Balance Sheet in good format.

Answer & Explanation Solved by verified expert
3.9 Ratings (581 Votes)

1-
Journal entries
date explanantion debit credit
1-Jan cash 1200000
common stock 40000
additional paid in capital -common stock 1160000
1-Feb cash 4200000
preferred stock 140000
additional paid in capital - preferred stock 4060000
1-Jun treasury stock 200000
cash 200000
1-Dec dividend payable 65000
cash 65000
2-
Ending retained earning
net income 245000
less dividend 65000
Year end balance in retained earning 180000
3-
Statement of shareholders equity
common stock 40000
preferred stock 140000
additional paid in capital -common stock 1160000
additional paid in capital - preferred stock 4060000
retained earning 180000
treasury stock -200000
balance in shareholders equity 5380000

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