Included In The December 31, 2015, Jacobi Company Balance Sh

Included In The December 31 2015 Jacobi Company Balance Sheet Was Th

Prepare journal entries to record the foregoing stock transactions during 2016 and prepare the shareholders’ equity section of the balance sheet as of December 31, 2016, considering that net income for the year was $270,000. The initial balances as of December 31, 2015, are provided and include details on contributed capital, retained earnings, accumulated other comprehensive income, and treasury stock.

Paper For Above instruction

The shareholders’ equity section on December 31, 2015, of Jacobi Company presented a detailed overview of the company’s capital structure, including preferred stock, common stock, paid-in capital, retained earnings, accumulated other comprehensive income, and treasury stock. Throughout 2016, the company engaged in multiple transactions that impacted shareholders’ equity, including issuing shares, paying dividends, declaring stock dividends, stock splits, reissuing treasury stock, and declaring property dividends. This comprehensive analysis aims to record these transactions through journal entries and update the shareholders’ equity statement accordingly.

Journal Entries for 2016 Transactions

The first transaction involved paying semiannual dividends on preferred and common stock on January 4. The preferred stock pays a 6% dividend on a $100 par value, so the dividend per preferred share is $6 annually, $3 semiannually. The common stock dividend was $1.60 per share annually, paid semiannually, hence $0.80 per share in January. The journal entries are as follows:

January 4 - Payment of Semiannual Dividends

Debit: Dividends on Preferred Stock

Credit: Cash

• To record the semiannual preferred dividends: \( 200,000 \div 100 \times 3 = \$6,000 \)

Debit: Dividends on Common Stock

Credit: Cash

• To record the semiannual common dividends: \( (150,000 \div 5) \times 0.80 = \$120,000 \)

Next, the company issued 500 preferred shares at $110 per share on January 5:

January 5 - Issuance of Preferred Stock

Debit: Cash

Credit: Preferred Stock \( 500 \times 100 = \$50,000 \)

Credit: Additional Paid-in Capital on Preferred Stock \( (110 - 100) \times 500 = \$5,000 \)

On January 22, 4,000 common shares were issued at $23 per share:

January 22 - Issuance of Common Stock

Debit: Cash \( 4,000 \times 23 = \$92,000 \)

Credit: Common Stock \( 4,000 \times 2.50 = \$10,000 \) (par value after stock split)

Credit: Additional Paid-in Capital on Common Stock \( 92,000 - 10,000 = \$82,000 \)

On April 2, treasury stock reissuance of 700 shares at $24 per share:

April 2 - Reissuance of Treasury Stock

Debit: Cash \( 700 \times 24 = \$16,800 \)

Credit: Treasury Stock \( 700 \times cost \)

Assuming the treasury stock was recorded at a cost of $24 per share, the treasury stock account is reclassified:

May 14 - Declaration of 10% Stock Dividend

The stock dividend is payable June 29, and the current stock price is $25, so the dividend adds to common share count and paid-in capital.

June 29 - Distribution of Stock Dividend

July 5 - Payment of Cash Dividend

June 4 - Declaration of Semiannual Preferred and Common Dividends

August 3 - Declaration of Property Dividend

September 14 - Property Dividend Payment

December 3 - Declaration of Semiannual Dividends

Updating Shareholders’ Equity Section as of December 31, 2016

Starting from the December 31, 2015, balances, the stock transactions, net income addition, and dividends paid during 2016 have been incorporated to reflect the company's financial position at year-end.

The total net income for 2016 is reported as $270,000. Dividends declared and paid reduce retained earnings, while new stock issues and stock dividends adjust common and preferred stock balances and additional paid-in capital. Treasury stock reissuance adjusts the treasury stock account, and property dividends impact the available-for-sale securities valuation.

The final shareholders' equity section includes prepared figures:

• Preferred stock increased by issuance of 500 shares.
• Common stock increased due to stock split and issuance of 4,000 shares.
• Paid-in capital adjusted for new issues and treasury reissuance.
• Retained earnings increased by net income and decreased by dividends.
• Accumulated other comprehensive income adjusted by unrealized gains/losses on securities, including property dividend impacts.

In conclusion, the transactions of 2016 notably influence the shareholders' equity structure, reflecting a dynamic corporate finance strategy. Precise journal entries and accurate updating of equity components ensure transparent financial reporting aligned with generally accepted accounting principles.

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