Question

4 5 Problem Murray Corporation started operations in 2018. It only has one class of stock - common stock with a $5 par value. It's authorized to issue 50,000 shares of stock. Below are the following transactions in 2018 and 2019 that affected its stockholder's equity accounts. 2018 Jan. 2 Issued 30,000 shares of common stock (par $5) for $190,000. Mar. 20 Issued 10,000 shares of common stock (par $5) in exchange for a building and land. The building is valued at $45,000 and the land at 35,000. Dec. 31 Closed the $24,500 credit balance (from net income) in the Income Summary to Retained Earnings. 2013 Jan. 5 Mar. 1 Apr. 5 Jun. 20 Sep. 15 Dec. 31 2019 Purchased 5,000 shares of its own stock at $10 cash per share. Directors declared a $0.50 per share cash dividend payable on April 5 to the March 20 stockholders of record. Paid the dividend declared on March 1. Sold 1,200 of its treasury shares at $12.50 cash per share. Sold 1,500 of its treasury shares at $7 cash per share Closed the $32,000 credit balance (from net income) in the Income Summary account to Retained Earnings 24 Required 1 Prepare the journal entries to record each of these transactions. Calculate the ending balance in Retained Earnings for both 2018 and 2019. Hint: Create a T-Account for Retained Earnings and Post all the transactions affecting R.E. each year. Prepare the stockholder's equity section of the company's balance sheet as of 12/31/2019. I've prepared the 2018 one for you below for formatting/check figures. Hint: for 2019 you will need to add in the effects of treasury stock. Stockholder's equity section of Balance Sheet as of 12/31/18 Common Stock-$5 par; 50,000 shares authorized, 40,000 issued 200,000 70,000 24,500 Paid in capital in excess of par value, common stock Retained Earnings Less cost of treasury stock Total Stockholders' equity $ 294,500 Ch. 13 Excel Instructions CH. 13 Excel Work
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Answer 1

1.

Date	General Journal	Debit	Credit
2018 entries:
Jan. 2	Cash	190000
	Common stock (30000 x $5)		150000
	Paid-in capital in excess of par value, common stock		40000
	(To record common stock issued)
Mar. 20	Building	45000
	Land	35000
	Common stock (10000 x $5)		50000
	Paid-in capital in excess of par value, common stock		30000
	(To record common stock issued)
Dec. 31	Income summary	24500
	Retained earnings		24500
	(To record close of income summary account)
2019 entries:
Jan. 5	Treasury stock (5000 x $10)	50000
	Cash		50000
	(To record purchase of treasury stock)
Mar. 1	Retained earnings [$0.50 x (30000 + 10000 - 5000)]	17500
	Dividends payable		17500
	(To record declaration of cash dividend)
Apr. 5	Dividends payable	17500
	Cash		17500
	(To record payment of cash dividend)
Jun. 20	Cash (1200 x $12.50)	15000
	Treasury stock (1200 x $10)		12000
	Paid-in capital from treasury stock		3000
	(To record sale of treasury stock)
Sep. 15	Cash (1500 x $7)	10500
	Paid-in capital from treasury stock	3000
	Retained earnings	1500
	Treasury stock (1500 x $10)		15000
	(To record sale of treasury stock)
Dec. 31	Income summary	32000
	Retained earnings		32000
	(To record close of income summary account)

Shares Outstanding
Jan. 2	30000
Mar. 20	40000
Jan. 5	35000
Jun. 20	36200
Sep. 15	37700

2.

Retained Earnings
		24500	Dec. 31
		24500	2018 bal.
Mar. 1	17500
Sep. 15	1500
		32000	Dec. 31
		37500	2019 bal.

3.

Stockholders' equity section of Balance Sheet as of 12/31/19
Common Stock-$5 par; 50,000 shares authorized, 40,000 shares issued; 37,700 shares outstanding	200000
Paid-in capital in excess of par value, common stock	70000
Retained earnings	37500
Less cost of treasury stock (2,300 shares)	23000
Total Stockholders' equity	284500