Question

Stockholders Equity: Transactions and Balance Sheet Presentation The stockholder's equity accounts of Cooper Corporation at January 1 follow:

Common stock, $1 par value, 350,000 shares authorized;

150,000 shares issued and outstanding....................................... $150,000

Paid-in capital in excess of par value............................................... $600,000

Retained earnings............................................................................ $366,000

During the year, the following transactions occurred:

Jan 5.) Issued 20,000 shares of common stock for $15 cash per share

Jan 18.) Purchased 4000 shares of common stock as treasury stock at $14 cash per share

Mar 12.) Sold  one-fourth of the treasury shares acquired January 18 for $17 per share

July 17.) Sold 600 shares of the remaining treasury stock for $12 per share

Oct 1.) Issued 5,000 shares of eight percent, $25 par valued preferred stock for $35 cash per share. These are the first preferred shares issued out of 50,000 authorized shares.

Dec. 31) Closed the net income of $170,000 to the Retained Earnings account.

Required

A.) Set up T-accounts for the stockholders' equity accounts as of the beginning of the year and enter the January 1 balances

B.) Prepare the journal entries to record the foregoing transactions and post to T-accounts(set up any additional T-accounts needed). Do not prepare the journal entry for the Dec.31 transaction, but post the appropriate amount to the Retained Earnings T-account. Determine the ending balance for the stockholders' equity accounts.

C.) Prepare the December 31 stockholders' equity section of the balance sheet.

Answer 1

a.

Preferred Stock
		Beg. bal.	0
		Oct 1	125,000
		Bal. Dec 31	125,000
Paid-in Capital in Excess of Par Value: Preferred Stock
		Beg. bal.	0
		Oct 1	50,000
		Bal. Dec 31	50,000
Common Stock
		Beg. bal.	150,000
		Jan 5	20,000
		Bal. Dec 31	170,000
Paid-in Capital in Excess of Par Value: Common Stock
		Beg. bal.	600,000
		Jan 5	280,000
		Bal. Dec 31	880,000
Treasury Stock
Beg. bal.	0	Mar 12	14,000
Jan 18	56,000	July 17	8,400
Bal. Dec 31	33,600
Paid-in Capital: Treasury Stock
		Beg. bal.	0
July 17	1,200	Mar 12	3,000
		Bal. Dec 31	1,800
Retained Earnings
		Beg. bal.	366,000
		Dec 31	170,000
		Bal. Dec 31	536,000

b. In the books of Cooper Corporation :

Date	Account Titles	Debit	Credit
		$	$
Jan 5	Cash	300,000
	Common Stock		20,000
	Paid-in Capital in Excess of Par Value: Common Stock		280,000
Jan 18	Treasury Stock	56,000
	Cash		56,000
Mar 12	Cash	17,000
	Treasury Stock ( 1,000 x $ 14 )		14,000
	Paid-in Capital: Treasury Stock		3,000
July 17	Cash	7,200
	Paid-in Capital: Treasuy Stock	1,200
	Treasury Stock ( 600 x $ 14 )		8,400
Oct 1	Cash	175,000
	Preferred Stock		125,000
	Paid-in Capital in Excess of Par Value: Preferred Stock		50,000
Dec 31	Income Summary	170,000
	Retained Earnings		170,000

c.

Cooper Corporation Balance Sheet ( Partial ) December 31
Stockholders Equity
Preferred Stock, 8%, $ 25 par, 5,000 shares issued and outstanding	$ 125,000
Paid-in Capital in Excess of Par Value: Preferred Stock	50,000
Common Stock, $ 1 par . 170,000 issued	170,000
Paid-in Capital in Excess of Par Value: Common Stock	880,000
Paid-in Capital: Treasury Stock	1,800
Total Paid-in Capital	$ 1,226,800
Retained Earnings	536,000
Less: Treasury Stock, at cost	(33,600)
Total Stockholders Equity	$ 1,729,200