P12-30A

Issuing stock and preparing the stockholders’ equity section of the balance sheet [15–20 min]

Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln-Priest balance sheet reported the following stockholders’ equity:

Requirements

• 1.During 2012, the company completed the following selected transactions. Journalize each transaction. Explanations are not required.
  • a.Issued for cash 1,300 shares of preferred stock at par value.
  • b.Issued for cash 2,400 shares of common stock at a price of $5 per share.
  • c.Net income for the year was $74,000, and the company declared no dividends. Make the closing entry for net income.
• 2.Prepare the stockholders’ equity section of the Lincoln-Priest balance sheet at December 31, 2012.

Computing dividends on preferred and common stock [15–20 min]

Fashonista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares of $2 par common stock outstanding. During a three-year period, Fashionista declared and paid cash dividends as follows: 2010, $3,000; 2011, $13,000; and 2012, $17,000.

Requirements

• 1.Compute the total dividends to preferred and to common for each of the three years if
  • a.preferred is noncumulative.
  • b.preferred is cumulative.
• 2.For requirement 1.b., journalize the declaration of the 2012 dividends on December 22, 2012, and payment on January 14, 2013. Use separate Dividends payable accounts for preferred and common.

P13-24A

Journalizing stockholders’ equity transactions [20–25 min]

Summerborn Manufacturing, Co., completed the following transactions during 2012:

Journalizing dividend and treasury stock transactions, and preparing stockholders’ equity [10–30 min]

The balance sheet of Lennox Health Foods, at December 31, 2011, reported 120,000 shares of no-par common stock authorized, with 25,000 shares issued and a Common stock balance of $190,000. Retained earnings had a balance of $115,000. During 2012, the company completed the following selected transactions: