P11-2 Preparing the Stockholders Equity Section of the Balance Sheet LO11-3, 11-7 Witt Corporation received its charter during January 2014. The charter authorized the following capital stock: Preferred stock: 10 percent, par $10, authorized 21,000 shares Common stock: par $8, authorized 50,000 shares. During 2014, the following transactions occurred in the order given: a. Issued a total of 40,000 shares of the common stock to the four organizers at $12 per share. b. Sold 5,500 shares of the preferred stock at $16 per share. c. Sold 3,000 shares of the common stock at $15 per share and 1,000 shares of the preferred stock at $26. d. Net income for the year was $96,000. Required: Prepare the Stockholdersâ Equity section of the balance sheet at December 31, 2014. Possible input areas are shaded. WITT CORPORATION Balance Sheet (Partial) At December 31, 2014 Stockholdersâ equity: Contributed capital: Total contributed capital 639,000 Total stockholdersâ equity
| P11-2 Preparing the Stockholders Equity Section of the Balance Sheet LO11-3, 11-7 | |||
| Witt Corporation received its charter during January 2014. The charter authorized the following capital stock: | |||
| Preferred stock: 10 percent, par $10, authorized 21,000 shares | |||
| Common stock: par $8, authorized 50,000 shares. | |||
| During 2014, the following transactions occurred in the order given: | |||
| a. | Issued a total of 40,000 shares of the common stock to the four organizers at $12 per share. | ||
| b. | Sold 5,500 shares of the preferred stock at $16 per share. | ||
| c. | Sold 3,000 shares of the common stock at $15 per share and 1,000 shares of the preferred stock at $26. | ||
| d. | Net income for the year was $96,000. | ||
| Required: | |||
| Prepare the Stockholdersâ Equity section of the balance sheet at December 31, 2014. | |||
| Possible input areas are shaded. | |||
| WITT CORPORATION | |||
| Balance Sheet (Partial) | |||
| At December 31, 2014 | |||
| Stockholdersâ equity: | |||
| Contributed capital: | |||
| Total contributed capital | 639,000 | ||
| Total stockholdersâ equity | |||
Related questions
Problem 1
Sweet Sixteen has two classes of stock authorized: $100 par preferred and $1 par value common. As of the beginning of 2012, 1,000 shares of preferred stock have been issued and 20,000 shares of common stock have been issued. The following transactions affect stockholdersâ equity during 2012:
March 1 Issue 3,000 additional shares of common stock for $22 per share.
April 1 Issue 5,000 additional shares of preferred stock for $110 per share.
June 1 Declare a cash dividend on common stock of $1 per share and a cash dividend on preferred stock of $5 per share to all stockholders of record on June 15.
June 30 Pay the cash dividends declared on June 1.
August 1 Repurchase 2,000 shares of common treasury stock for $18 per share.
October 1 Reissue 1,000 shares of treasury stock purchased on August 1 for $20 per share.
Sweet Sixteen has the following beginning balances in its stockholdersâ equity accounts on January 1, 2012: preferred stock, $100,000, common stock, $20,000; paid-in capital, $380,000; and retained earnings, $450,000. Net income for the year ended December 31, 2012, is $65,000.
Required:
1. Record each of these transactions.
2. Indicate whether each of these transactions would increase (+), decrease (â), or have no effect (NE) on total assets, total liabilities, and total stockholdersâ equity by completing the following chart.
| Transaction | Total Assets | Total Liabilities | Total Stockholdersâ Equity |
| Issue common stock | |||
| Issue preferred stock | |||
| Declare cash dividends | |||
| Pay cash dividends | |||
| Repurchase treasury stock | |||
| Reissue treasury stock |
3. Prepare the stockholdersâ equity section of the balance sheet as of December 31, 2012.
4. Prepare the statement of stockholdersâ equity for the year ended December 31, 2012.
5. Explain how items 3 and 4 are similar and how they are different.
The following selected accounts appear in the ledger of Patton Environmental Inc. on July 1, 2014, the beginning of the current fiscal year:
| Preferred 2% Stock, $100 par (90,000 shares authorized, 45,000 shares issued) | $4,500,000 |
| Paid-In Capital in Excess of ParâPreferred Stock | 540,000 |
| Common Stock, $15 par (700,000 shares authorized, 190,000 shares issued) | 2,850,000 |
| Paid-In Capital in Excess of ParâCommon Stock | 370,000 |
| Retained Earnings | 17,511,000 |
During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:
Issued 70,000 shares of common stock at $18, receiving cash.
Issued 23,000 shares of preferred 2% stock at $120.
Purchased 42,000 shares of treasury common for $714,000.
Sold 21,000 shares of treasury common for $420,000.
Sold 14,000 shares of treasury common for $210,000.
Declared cash dividends of $2.00 per share on preferred stock and $0.04 per share on common stock.
Paid the cash dividends.
Journalize the entries to record the transactions.
For a compound transaction, if an amount box does not require an entry, leave it blank.
