1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
xeze [42]
3 years ago
15

The stockholders’ equity accounts of Indigo Corporation on January 1, 2017, were as follows.

Business
1 answer:
Lubov Fominskaja [6]3 years ago
5 0

Answer:

Indigo Corporation

Journal Entries:

Feb. 1:

Debit Cash Account with $60,000

Credit Common Stock with $40,000

Credit Additional Paid-in Capital with $20,000

To record the issue of 10,000 shares of common stock, par $4 at $6 each.

March 20:

Debit Treasury Stock with $8,000

Debit Additional Paid-in Capital with $6,000

Credit Cash Account with $14,000

To record the repurchase of 2,000 shares of treasury stock at $7 each.

October 1:

Debit Dividends - Preferred Stock with $35,000

Credit Dividends Payable with $35,000

To record preferred stock dividends declared.

November 1:

Debit Dividends Payable with $35,000

Credit Cash Account with $35,000

To record cash payment of dividends.

December 1:

Debit Dividends - Common Stock with $249,000

Credit Dividends Payable with $249,000

To record $0.50 per share common stock dividend.

December 31:

Debit Dividends Payable with $249,000

Credit Cash Account with $249,000

To record payment of dividend.

Debit Net Income with $550,000

Credit Retained Earnings with $550,000

To record the transfer of net income to Retained Earnings.

Explanation:

a) Whereas $60,000 cash was received for the issue, only $40,000 (10,000 x $4) is credited to Common Stock.  The additional of $20,000 is credited to Additional Paid-in Capital.  This shows that the shares were issued above their par value.

b) When 2,000 shares of treasury stock were reacquired at a total cost of $7 per share, the Treasury Stock account is debited with the par value of $4 per share ($8,000).  The above par value difference is taken to the Additional Paid-in Capital account as a debit.

c) Dividends on preferred stock was prorated for 10 months, from January to October.  This is because the percentage dividend is for a year.

d) Dividends on common stock would not be prorated since they are based on annual percentages like preferred stock.  Dividends on the common stock is, therefore, calculable on the outstanding balance.  

e) Treasury Stock is a contra account to the Common Stock as it reduces the balance of common stock outstanding.  The outstanding balance of Treasury Stock increased to 12,000 (10,000 + 2,000).

f) Outstanding common stock reduced from 500,000 shares to 498,000 (500,000 + 10,000 - 12,000).  The additional 10,000 represented the new issue and the 12,000 represented the Treasury Stock.

You might be interested in
Why are free and fair elections most likely weakened by a lack of opposition parties? it allows some political issues to be igno
nirvana33 [79]
The first one, political issues are ignored
4 0
3 years ago
Read 2 more answers
Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; is
Nadya [2.5K]

Answer:

One parent organism and no egg or sperm

Explanation:

5 0
3 years ago
...<br><br><br><br><br>Great <br><br>-----------------
Vilka [71]

Answer:

Thanks for the points.

Explanation:

6 0
3 years ago
When Desi was determining which option works best to encourage employee participation when planning important changes, he learne
mylen [45]

Answer:

D) Shared power

Explanation:

Power sharing refers to a situation where a team leader will allow the team members to have decision power and influence within the group. It is a system that distributes power among all members of the team in order to encourage greater participation in the decision making processes.

In this case, Desi considers that sharing power with his staff will encourage them to participate more in the planning process. When an employee feels that his participation is valued, he/she will not be afraid or indifferent to do so.

3 0
3 years ago
The CARES Act allows special treatment for net operating losses incurred in 2018, 2019, and 2020. Which of the following is not
Ulleksa [173]

Answer: d. Taxpayers may claim the carryback using Form 1045 at any time within three years of the due date of the return for the NOL year.

Explanation:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, was signed into law in the wake of the effects of the Coronavirus pandemic that swept the nation in 2020.

Under this Act, all NOLs may be carried back five years and taxpayrs were allowed to waive their carryback period by attaching a statement to their 2020 return.

The Act however, did not allow for taxpayers to claim their carryback using Form 1045 at any time within three years of the due date of the return for the NOL year as this Act was only passed to cushion the effects of the pandemic in 2020.

3 0
2 years ago
Other questions:
  • New technology lowering the costs of production will cause the equilibrium price to ______________ and the equilibrium quantity
    6·2 answers
  • One of the most controversial aspects of the ada is the provision that requires employers to make reasonable accommodations for
    14·1 answer
  • Ben and his wife jenny have a disagreement over what kinds of investments they should make for long term financial security. ben
    13·2 answers
  • A labor contract provides for a first-year wage of $15 per hour, and specifies that the real wage will rise by 2 percent in the
    10·1 answer
  • Chen Company's account balances at December 31, 2017 for Accounts Receivable and the Allowance for Doubtful Accounts are $800,00
    6·1 answer
  • Derek, an accountant, allocates the cost of a piece of earth-moving equipment over a specific period of time. Based on the given
    7·1 answer
  • The following is the stockholders' equity section of Harbor Co.'s balance sheet on December 31:Common stock $10 par, 100,000 sha
    11·1 answer
  • On the worksheet, Accounts Receivable has a debit balance of $15,000 on the Unadjusted Trial Balance. In the Adjustments there i
    12·1 answer
  • You are valuing an investment that will pay you $28,000 per year for the first 4 years, $43,000 per year for the next 12 years,
    10·1 answer
  • Australia's Health Insurance Commission processes 300 million health claims and makes annual payments of $8 billion of payments
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!