Question

(7) Comprehensive

Byrd Company’s Contributed Capital section of its January 1, 2016, balance sheet is as follows:

Preferred stock (6%, $50 par, 8,000 shares authorized, 3,400 shares issued and outstanding)	$170,000
Common stock ($10 stated value, 30,000 shares authorized, 12,000 shares issued and outstanding)	120,000
Additional paid-in capital on preferred stock	12,800
Additional paid-in capital on common stock	72,000
Total contributed capital	$374,800

During 2016, Byrd entered into the following transactions:

Jan. 4	Established a compensatory share option plan for its key executives. The options vest after a 3-year service period. The estimated fair value of the options expected to be exercised is $81,000.
Apr. 23	Sold 300 shares of preferred stock at $55 per share.
June 7	Sold 600 shares of common stock at $17 per share.
Sept. 21	Purchased building by paying $9,000 cash and issuing 800 shares of common stock and 450 shares of preferred stock. Common and preferred stock are currently selling for $19 and $57 per share, respectively.
Oct. 12	Reacquired 900 shares of common stock at $19.50 per share. The company uses the cost method to account for treasury stock.
Nov. 15	Issued for $32,000 a combination of 700 shares of common stock and 12% bonds with a face value of $20,000. The common stock is currently selling for $18 per share. No market value exists for the bonds.
Dec. 14	Reissued the 900 shares of treasury stock at $20.50 per share.
28	Distributed a $3.00-per-share dividend on all outstanding preferred stock and a $1.50-per-share dividend on all common stock outstanding on this date (debit Retained Earnings and credit Cash for each dividend).

Required:

1.	Prepare memorandum and journal entries to record the preceding transactions.
2.	Prepare the Contributed Capital section of Byrd’s December 31, 2016, balance sheet.

CHART OF ACCOUNTS
Byrd Company
General Ledger
ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 172 Building 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 255 Bonds Payable 257 Discount on Bonds Payable 261 Income Taxes Payable EQUITY 305 Preferred Stock 311 Common Stock 318 Additional Paid-in Capital on Preferred Stock 320 Additional Paid-in Capital on Common Stock 321 Additional Paid-in Capital on Treasury Stock 325 Paid-in Capital from Share Options 331 Retained Earnings 335 Treasury Stock	REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 522 Compensation Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense

Labels
Contributed Capital
Amount Descriptions
Total Contributed Capital

Prepare journal entries to record the transactions during 2016. Memorandum entry is not recorded. Additional Instructions

PAGE 1 (12 ENTRIES) PAGE 2 (16 ENTRIES)

GENERAL JOURNAL

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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Prepare the Contributed Capital section of Byrd’s December 31, 2016, balance sheet.Additional Instructions

Byrd Company

Balance Sheet (Contributed Capital section)

December 31, 2016

                                                                                         Label                          Amount

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Answer 1