The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020 and that Mulatto 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 Issued $5000 shares of common stock. Stock has par value of 0.01 per share and was issued at $30.00 per share Issued $2000 shares of preferred stock at par value as payment in exchange for legal services. Exchanged 100,000 shares of common stock for land with an appraised value of $250,000 and a building with an appraised value of $450,000 Earned Net income $500,000 Paid dividends to preferred shareholders as well as $2 per share to common stockholders Prepare Mulatto Company’s Stockholders equity section of the balance sheet at December 31, 2020. The following information must be clearly stated/shown: information on par values, the number of shares authorized and issued where necessary. the sub total for the total paid in capital. Retained earnings. total stockholders’ equity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the company will be formed on January 1, 2020 and that Mulatto 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

Issued $5000 shares of common stock. Stock has par value of 0.01 per share and was issued at $30.00 per share

Issued $2000 shares of preferred stock at par value as payment in exchange for legal services.

Exchanged 100,000 shares of common stock for land with an appraised value of $250,000 and a building with an appraised value of $450,000

Earned Net income $500,000

Paid dividends to preferred shareholders as well as $2 per share to common stockholders

Prepare Mulatto Company’s Stockholders equity section of the balance sheet at December 31, 2020. The following information must be clearly stated/shown:
- information on par values,
- the number of shares authorized and issued where necessary.
- the sub total for the total paid in capital.
- Retained earnings.
- total stockholders’ equity.

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