Accounting Principles - Standalone book
Accounting Principles - Standalone book
12th Edition
ISBN: 9781118875056
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
Question
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Chapter 13, Problem 13.4AP

(a)

To determine

Stockholder’s equity: The stockholder’s equity refers to the right of the stockholder’s in the business. The stockholder’s equity is built up of two items (1) the paid-up capital from the shareholders and (2) the retained earnings of the business.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

  • To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.
  • To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To prepare: The journal entries for the treasury stock transactions and the closing entry for net income.

(b)

To determine

To prepare: The postings to be done in the ledger account of stockholder’s equity accounts.

(c)

To determine

To prepare: The stockholder’s equity section.

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