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Stockholders Equity: Transactions and Balance Sheet Presentation

The stockholders equity of Summit Corporation at January 1 follows:

7 Percent preferred stock, $100 par value, 20,000 shares authorized;
5,000 shares issued and outstanding	$500,000
Common stock, $15 par value, 100,000 shares authorized;
40,000 shares issued and outstanding	600,000
Paid-in capital in excess of par value-Preferred stock	24,000
Paid-in capital in excess of par value-Common stock	360,000
Retained earnings	325,000
Total Stockholders' Equity	$1,809,000

The following transactions, among others, occurred during the year:

Jan.	12	Announced a 3-for-1 common stock split, reducing the par value of the common stock to $5 per share. The authorization was increased to 300,000 shares.
Mar.	31	Converted $41,000 face value of convertible bonds payable (the book value of the bonds was $43,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.
June	1	Acquired equipment with a fair market value of $65,000 in exchange for 500 shares of preferred stock.
Sept.	1	Acquired 10,000 shares of common stock for cash at $11 per share.
Oct.	12	Sold 1,500 treasury shares at $13 per share.
Nov.	21	Issued 5,000 shares of common stock at $12 per share.
Dec.	28	Sold 1,200 treasury shares at $10 per share.
	31	Closed net income of $84,000 to the Retained Earnings account.

Required

• Prepare journal entries for the given transactions and post them to the T-accounts. Do not prepare the journal entry for the Dec. 31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balances for the stockholders equity accounts.
• Prepare the stockholders equity section of the balance sheet at December 31.

Do not use negative signs with your answers.

Stockholders' Equity
	Paid in Capital
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalLess: Treasury Stock - Common	Answer Correct Mark 1.00 out of 1.00
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common	Answer	Answer
	Additional Paid-in-Capital
	Paid-in-Capital in Excess of Par value -Preferred Stock	Answer
	Paid-in-Capital in Excess of Par value - Common Stock	Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common	Answer	Answer
	Total Paid-in-Capital		Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common		Answer
			Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common		Answer
	AnswerPreferred StockCommon StockRetained EarningsTotal Stockholders' EquityTotal Paid-in-CapitalPaid-in-Capital from Treasury StockLess: Treasury Stock - Common		Answer

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