Answer:
a. stockholder's Equity
DEBIT amount CREDIT amount
1 Jan 600000
bank 160000
bond 103000
bank 110000 balance c/d <u>973000</u>
bank
stockholder's 160000
stockholder's 110000 balance c/d 270000
preferred stock
1 Jan 500000
equipment 40000
balance c/d 540000
investment
bank 210000 bank 11500
paid in excess 1000
EQUIPMENT
preferred stock 40000 balance c/d 40000
Retained earnings
1 Jan 325000
balance c/d 475000 net income 150000
bond
DEBIT amount CREDIT amount
common stock 103000
paid in excess
balance c/d 1000 investment 1000
b. Journal entries
split shares no entry needed just a memo note
mar 30 Debit bonds 103000 credit stockholder's equity 103000
june 1 Debit equipment 40000 credit preferred stock 40000
Sep 1 Investment 210000 credit bank 210000
Nov 21 bank 110000 credit stockholder's equity 110000
Debit bank 11500 credit investment 10500, credit paid in excess 1000
Debit net income ( income summary) 150000 credit Retained earnings 150000
Explanation:
the missing parts of the question;
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 4-for-1 common stock split, reducing the par value of the common stock to $3.75 per share. The authorization was increased to 400,000 shares.
Mar. 31 Converted $40,000 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 $70,000 in exchange for 500 shares of preferred stock.
Sept. 1 Acquired 10,000 shares of common stock for cash at $10 per share.
Oct. 12 Sold 1,500 treasury shares at $12 per share.
Nov. 21 Issued 5,000 shares of common stock at $11 cash per share.
Dec. 28 Sold 1,200 treasury shares at $9 per share.
31 Closed net income of $95,000 to the Retained Earnings account.