Question

2. Destiny Calling, Co. reported the following information in the equity section of their balance sheet at December 31, 2019: Stockholders' equity: Preferred stock, $0.02 par $0 Common stock, $0.01 par (300,000 shares issued and outstanding) $3,000 Additional paid-in capital 109,421 Retained earnings 47,388 $159.809 Total equity During 2020, Destiny Calling completed these transactions that affected stockholders' equity: January 9 Issued 2,500 shares of common stock for $20 per share. March 15 Reacquired 1,000 shares of common stock as treasury stock, paying $9 per share. June 1 Declared a cash dividend of $0.01 per common share, payable to all stockholders of record on June 15th, 2020. June 30 Paid the cash dividend. October 17 Issued 1,700 shares of common stock for $22 per share.

Given the information provided:

1. Record all the journal entries for Destiny Calling’s transactions listed above.
2. Taking into account all of the information and all of the transactions above, prepare a Statement of Stockholders’ Equity for Destiny Calling for the period ended December 31, 2020. Use the format used in the pre-recorded lecture videos and also provided in your e-text, Illustration 10-20.   Assume net income for 2020 was $19,080.
3. Calculate the number of shares of Common Stock that would be outstanding as of December 31, 2020. Show all calculations.

Answer 1

a.

Date Account Debit Credit Jan.09 $ 50,000 Cash Common Stock (2500*$0.01) Additional Paid in Capital (Being 2500 Comon stock issued @$0.01 per stock) $ $ 25.0 49,975 Mar. 15 $ 9,000 Treasury Stock Cash (Being 1000 Treasury stock purchased @$9 per stock) $ 9,000 June.01 $ 3,015 $ 3,015 Cash Dividends Dividend Payable (300000+2500-1000) *$0.01 (Cash Dividend declared) June 30 $ 3,015 Dividend Payable Cash (Being Dividend paid) $ 3,015 Oct.17 $ 37,400 Cash Common Stock (1700*$0.01) Additional Paid in Capital (Being 1700 Comon stock issued @$0.01 per stock) $ $ 17.0 37,383

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b.

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January 1, Issue of Common stock Purchase of treasury stock Dividends Net income December 31, Statement of Stockholders Equity Common Paid-in Capital Retained Treasury Total Stock in excess Earnings Stock Shareholders' of par value Equity Common Stock $ 3,000 $ 1,09,421 $ 47,388 $ $ 1,59,809 $ 42 $ 87,358 $ $ 87,400 $ -9,000 $ -9,000 $ -3,015 $ -3,015 $ 19.080 $ 19,080 $ 3,042 $ 1,96,779 $ 63,453 $ -9,000 $ 2,54,274

c.

No.of Common Stock outstanding as of December 31, 2020. At the beginning 3,00,000 Common Stock issued during the year (2500+1700) 4,200 Less: Number of Treasury stock -1,000 3,03,200

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