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Wk4 Assignment: Project # 2 - Individual Instructions: This project requires you to apply the concepts and methods learned so far in the course. This is an individual project. You are permitted to discuss this project within your respective group of fellow students. Please note that the project does not have a word count requirement as computations and a brief dialogue; if any, are only necessary. Moreover, show your work and solutions unto a word document that may be attached to your "Assignment Manager link." Each individual will submit their paper to the Professor via the Assignment Manager link. PROJECT : Common Stock Issuance, Treasury Stock, Preferred Stock, Dividends, Comprehensive Income, Disclosure. [Learning Objectives 2, 3, 4, 5, 6, 7] Castleline, Inc. reported the following shareholders' equity section as of the beginning of the current year: Contributed Capital: Stockholders' Equity Common Stock, $1 par value, 3,850,000 shares authorized, 905,000 shares issued, and 821,500 shares outstanding $ 905,000 Additional Paid-in Capital in Excess of Par - Common 22,625,000 Total Contributed Capital $ 23,530,000 Retained Earnings $ 8,957,450 Accumulated Other Comprehensive Income 1,057,600 Less: Treasury Stock (83,500 common shares at cost) (1,670,000) Total Stockholders' Equity $31,875,050 During the current year, Castleline engaged in the following transactions affecting the stockholders' equity section of its current balance sheet. 1. Issued 400,000 shares of its $1 par value common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares. The stock issue costs are not capitalized. 2. Issued 500,000 shares of $10 par value 6% preferred stock (2,550,000 authorized) at $40 per share. These shares were privately placed and Castleline did not pay stock issue costs.

Wk4 Assignment: Project # 2 - Individual Instructions: This project requires you to apply the concepts and methods learned so far in the course. This is an individual project. You are permitted to discuss this project within your respective group of fellow students. Please note that the project does not have a word count requirement as computations and a brief dialogue; if any, are only necessary. Moreover, show your work and solutions unto a word document that may be attached to your "Assignment Manager link." Each individual will submit their paper to the Professor via the Assignment Manager link. PROJECT : Common Stock Issuance, Treasury Stock, Preferred Stock, Dividends, Comprehensive Income, Disclosure. [Learning Objectives 2, 3, 4, 5, 6, 7] Castleline, Inc. reported the following shareholders' equity section as of the beginning of the current year: Contributed Capital: Stockholders' Equity Common Stock, $1 par value, 3,850,000 shares authorized, 905,000 shares issued, and 821,500 shares outstanding $ 905,000 Additional Paid-in Capital in Excess of Par - Common 22,625,000 Total Contributed Capital $ 23,530,000 Retained Earnings $ 8,957,450 Accumulated Other Comprehensive Income 1,057,600 Less: Treasury Stock (83,500 common shares at cost) (1,670,000) Total Stockholders' Equity $31,875,050 During the current year, Castleline engaged in the following transactions affecting the stockholders' equity section of its current balance sheet. 1. Issued 400,000 shares of its $1 par value common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares. The stock issue costs are not capitalized. 2. Issued 500,000 shares of $10 par value 6% preferred stock (2,550,000 authorized) at $40 per share. These shares were privately placed and Castleline did not pay stock issue costs.

FINANCIAL ACCOUNTING
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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Wk4 Assignment: Project #2 - Individual Instructions: This project requires you to apply the concepts and methods learned so far in the course. This is an individual project. You are permitted to discuss this project within your respective group of fellow students. Please note that the project does not have a word count requirement as computations and a brief dialogue; if any, are only necessary. Moreover, show your work and solutions unto a word document that may be attached to your "Assignment Manager link." Each individual will submit their paper to the Professor via the Assignment Manager link. PROJECT: Common Stock Issuance, Treasury Stock, Preferred Stock, Dividends, Comprehensive Income, Disclosure. [Learning Objectives 2, 3, 4, 5, 6, 7] Castleline, Inc. reported the following shareholders' equity section as of the beginning of the current year: Contributed Capital: Stockholders' Equity Common Stock, $1 par value, 3,850,000 shares authorized, 905,000 shares issued, and 821,500 shares outstanding $ 905,000 Additional Paid-in Capital in Excess of Par - Common 22,625,000 Total Contributed Capital $ 23,530,000 Retained Earnings $ 8,957,450 Accumulated Other Comprehensive Income 1,057,600 Less: Treasury Stock (83,500 common shares at cost) Total Stockholders' Equity (1,670,000) $31,875,050 During the current year, Castleline engaged in the following transactions affecting the stockholders' equity section of its current balance sheet. 1. Issued 400,000 shares of its $1 par value common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares. The stock issue costs are not capitalized. 2. 1 | Page Issued 500,000 shares of $10 par value 6% preferred stock (2,550,000 authorized) at $40 per share. These shares were privately placed and Castleline did not pay stock issue costs.
Transcribed Image Text:Wk4 Assignment: Project #2 - Individual Instructions: This project requires you to apply the concepts and methods learned so far in the course. This is an individual project. You are permitted to discuss this project within your respective group of fellow students. Please note that the project does not have a word count requirement as computations and a brief dialogue; if any, are only necessary. Moreover, show your work and solutions unto a word document that may be attached to your "Assignment Manager link." Each individual will submit their paper to the Professor via the Assignment Manager link. PROJECT: Common Stock Issuance, Treasury Stock, Preferred Stock, Dividends, Comprehensive Income, Disclosure. [Learning Objectives 2, 3, 4, 5, 6, 7] Castleline, Inc. reported the following shareholders' equity section as of the beginning of the current year: Contributed Capital: Stockholders' Equity Common Stock, $1 par value, 3,850,000 shares authorized, 905,000 shares issued, and 821,500 shares outstanding $ 905,000 Additional Paid-in Capital in Excess of Par - Common 22,625,000 Total Contributed Capital $ 23,530,000 Retained Earnings $ 8,957,450 Accumulated Other Comprehensive Income 1,057,600 Less: Treasury Stock (83,500 common shares at cost) Total Stockholders' Equity (1,670,000) $31,875,050 During the current year, Castleline engaged in the following transactions affecting the stockholders' equity section of its current balance sheet. 1. Issued 400,000 shares of its $1 par value common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares. The stock issue costs are not capitalized. 2. 1 | Page Issued 500,000 shares of $10 par value 6% preferred stock (2,550,000 authorized) at $40 per share. These shares were privately placed and Castleline did not pay stock issue costs.
3. Purchased 220,000 shares of common stock at $32 per share. 4. 5. 6. 7. 8. 9. 10. Declared a $450,000 dividend for the first half of the year. (The declarations should be recorded separately for the common and the preferred shares.) Sold 105,000 of the treasury shares at $44 per share. (The 83,500 treasury shares on hand at the beginning of the year are considered sold first. The company paid $20 per share for these shares of treasury stock). Paid the cash dividends. Reported net income of $3,180,500 for the current year. In addition to the net income, Castleline incurred an $801,000 unrealized loss on an available-for-sale debt investment. Declared a $450,000 cash dividend for the second half of the year. (The declarations should be recorded separately for the common and the preferred shares.) Closed out all dividends and other comprehensive income accounts. DELIVERABLES a. Prepare all journal entries required to record those transactions. b. Construct the shareholders' equity section for the year-end balance sheet and the relevant t-accounts. This assignment is due by Sunday at 11:59 pm. 2 | Page
Transcribed Image Text:3. Purchased 220,000 shares of common stock at $32 per share. 4. 5. 6. 7. 8. 9. 10. Declared a $450,000 dividend for the first half of the year. (The declarations should be recorded separately for the common and the preferred shares.) Sold 105,000 of the treasury shares at $44 per share. (The 83,500 treasury shares on hand at the beginning of the year are considered sold first. The company paid $20 per share for these shares of treasury stock). Paid the cash dividends. Reported net income of $3,180,500 for the current year. In addition to the net income, Castleline incurred an $801,000 unrealized loss on an available-for-sale debt investment. Declared a $450,000 cash dividend for the second half of the year. (The declarations should be recorded separately for the common and the preferred shares.) Closed out all dividends and other comprehensive income accounts. DELIVERABLES a. Prepare all journal entries required to record those transactions. b. Construct the shareholders' equity section for the year-end balance sheet and the relevant t-accounts. This assignment is due by Sunday at 11:59 pm. 2 | Page
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For the transaction of the purchase of common stock, why are we debiting cash and crediting the common stock? Would you not reverse this transaction, if so the retained earnings are also incorrect. 

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