Assume one year later (2019) the company A&B Company Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making processThe company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration:A&B Company Ltd purchased a piece of land from the original owner. In payment for the land, A&B Company Ltd issues $400,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,480,000.The company sold 110,000 shares of common stock with $1 par value.Issued 24,000 shares of $14 par value preferred stock. Shares were issued at par.Earned net income of $1,000,000Dividend declared and paid - $0.15 per share on common stockDividend declared and paid - $5 per share on preferred stockUsing the information above and as guided:1. Prepare the Journal entries and closing entries for the above transaction2. Prepare the owner’s equity section of the balance sheet based on the info above.SHOW ALL WORKING

Answered: Assume one year later (2019) the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Assume one year later (2019) the company A&B Company Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process

The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration:

A&B Company Ltd purchased a piece of land from the original owner. In payment for the land, A&B Company Ltd issues $400,000 shares of common stock with $1.00 par value. The land has been appraised at a market value of 1,480,000.
The company sold 110,000 shares of common stock with $1 par value.
Issued 24,000 shares of $14 par value preferred stock. Shares were issued at par.
Earned net income of $1,000,000
Dividend declared and paid - $0.15 per share on common stock
Dividend declared and paid - $5 per share on preferred stock

Using the information above and as guided:

1. Prepare the Journal entries and closing entries for the above transaction

2. Prepare the owner’s equity section of the balance sheet based on the info above.

SHOW ALL WORKING

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