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Chapter 13: Q21RQ (page 707)
What is a prior-period adjustment?
A prior-period adjustment is a amendment to retained earnings for an error in an prior period.
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Preparing a statement of retained earnings
Kingston, Inc. had beginning retained earnings of \(135,000 on January 1, 2018. During the year, Kingston declared and paid \)85,000 of cash dividends and earned $75,000 of net income. Prepare a statement of retained earnings for Kingston, Inc. for the year ending December 31, 2018.
Journalizing issuance of stock and preparing the stockholders鈥� equity section of the balance sheet
The charter for ASAP-TV, Inc. authorizes the company to issue 100,000 shares of \(5, no-par preferred stock and 500,000 shares of common stock with \)1 par value. During its start-up phase, ASAP-TV completed the following transactions:
Sep. 6 Issued 550 shares of common stock to the promoters who organized the corporation, receiving cash of \(16,500.
12 Issued 400 shares of preferred stock for cash of \)23,000.
14 Issued 1,500 shares of common stock in exchange for land with a market value of \(17,000.
Requirements
1. Record the transactions in the general journal.
2. Prepare the stockholders鈥� equity section of the ASAP-TV balance sheet atSeptember 30, 2018, assuming ASAP-TV, Inc. had net income of \)38,000 for the month.
Eates Corp. issued 8,000 shares of no-par common stock for $13 per share.
Requirements
2. Which type of stock results in more total paid-in capital?
How does authorized stock differ from ouststanding stock?
A Identifying sources of equity, stock issuance, and dividends
Voyage Comfort Specialists, Inc. reported the following stockholders鈥� equity on its balance sheet at June 30, 2018:
Preferred Stock鈥�7%, ? Par Value; 625,000 shares
authorized, 280,000 shares issued and outstanding
Paid-In Capital:
\( 1,400,000
1,340,000
Stockholders鈥� Equity
Paid-In Capital in Excess of Par鈥擟ommon 2,900,000
Total Paid-In Capital 5,640,000
Retained Earnings 12,000,000
Total Stockholders鈥� Equity \) 17,640,000
Common Stock鈥�$1 Par Value; 3,000,000 shares
authorized, 1,340,000 shares issued and outstanding
Requirements
3. Make two summary journal entries to record issuance of all the Voyage Comfort Specialists鈥� stock for cash. Explanations are not required.
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