The company is desirous of comparing serval financial transactions and possible outcomes to assist in guiding its decision-making process. It is assumed that the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your surname name initial. Issued 65,000 shares of common stock. Stock has par value of 0.40 per share and was issued at $30 per share. Issued 10,000 shares of preferred stock at par value as payment in exchange for legal servicesExchanged 200,000 shares of common stock for land with an appraised value of $ 500,000 and a building with an appraised value of $700,000.Earned Net income $750,000.Paid dividends to preferred shareholders as well as $2 per share to common stockholders.Using the info above and as a guide: Prepare the journal entries with narrations to record the following:The issuances of stock.Close out net income to retained earnings.Dividend paid.Close out dividend to retained earnings.

The journal entries are prepared to keep the record of day to day transactions of the business.

Answered: The company is desirous of comparing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The company is desirous of comparing serval financial transactions and possible outcomes to assist in guiding its decision-making process. It is assumed that the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your surname name initial.

Issued 65,000 shares of common stock. Stock has par value of 0.40 per share and was issued at $30 per share.

Issued 10,000 shares of preferred stock at par value as payment in exchange for legal services
Exchanged 200,000 shares of common stock for land with an appraised value of $ 500,000 and a building with an appraised value of $700,000.
Earned Net income $750,000.
Paid dividends to preferred shareholders as well as $2 per share to common stockholders.

Using the info above and as a guide:

Prepare the journal entries with narrations to record the following:

The issuances of stock.
Close out net income to retained earnings.
Dividend paid.
Close out dividend to retained earnings.

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