M5 Assignment Module 5 Assignment Pearson Began 20xx
M5 Assignmentmodule 5 Assignmentpearson Began 20xx With 30000 1 Comm
Complete the following financial accounting tasks for Pearson Wood Supplies based on the provided transactions for the year 20XX. First, record the transactions in the journal with the applicable debits and credits. Then, prepare a comprehensive statement of shareholders' equity as of December 31, 20XX, including all changes resulting from the transactions and net income.
Paper For Above instruction
Journal Entries for 20XX Transactions
On January 2, Pearson Wood Supplies issued 10,000 shares of $1 par common stock at $10 per share. The journal entry reflects the issuance of stock, increasing cash and common stock, along with additional paid-in capital.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Jan 2 | Cash | $100,000 | ||
| Jan 2 | Common Stock ($1 par) | $10,000 | ||
| Jan 2 | Paid-in Capital in Excess of Par—Common Stock | $90,000 |
On January 6, dividends were declared on preferred and common stocks. The preferred dividend is 5% of the $4 par value for 5,000 shares, and the common dividend is $0.20 per share on 40,000 shares.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Jan 6 | Dividends Payable—Preferred | $1,000 | ||
| Dividends Payable—Common | $8,000 | |||
| Jan 6 | Dividends Declared | $9,000 |
On January 15, the date of record, no journal entry is required. On January 20, the dividends are paid.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Jan 20 | Dividends Payable—Preferred | $1,000 | ||
| Dividends Payable—Common | $8,000 | |||
| Jan 20 | Cash | $9,000 |
On March 15, a 2-for-1 stock split is declared. The stock split does not require a journal entry but affects the number of shares outstanding and par value.
On April 10, a 10% stock dividend is declared when the market value is $12 per share. The journal entry records the declaration, and the value of dividend stock issued.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Apr 10 | Stock Dividends | $57,600 | ||
| Common Stock Dividends Distributable | $12,000 | |||
| Paid-in Capital in Excess of Par—Common Stock | $45,600 |
On June 14, Pearson purchased 1,000 shares of treasury stock at $13 per share.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Jun 14 | Treasury Stock | $13,000 | Cash | $13,000 |
On December 22, the treasury stock is sold for $15 per share, resulting in a gain over the treasury stock book value.
| Date | Account Title | Post Ref. | Debit | Credit |
|---|---|---|---|---|
| Dec 22 | Cash | $7,500 | ||
| Treasury Stock | $13,000 | |||
| Paid-in Capital from Treasury Stock Sale | $2,500 |
Statement of Shareholders' Equity for 20XX
The statement consolidates all changes in equity accounts over the year, including net income, dividends, stock issuance, stock splits, stock dividends, and treasury stock transactions.
Beginning Balances, January 1, 20XX
- Preferred Stock: 5,000 shares of $4 par (total $20,000)
- Common Stock: 30,000 shares of $1 par (total $30,000)
- Paid-in Capital in Excess of Par: $25,000
- Retained Earnings: $175,000
- Treasury Stock: $0
Changes During 20XX
- Issuance of 10,000 common shares at par + premium ($100,000 increase in common stock and paid-in capital)
- Net Income: $22,000
- Dividends Paid: Preferred ($1,000) and Common ($8,000)
- Stock Split: 2-for-1 (doubling shares and halving par value)
- Stock Dividend: 10% of post-split shares at $12 market value ($57,600)
- Purchase of Treasury Stock: 1,000 shares at $13 ($13,000 increase in treasury stock)
- Sale of Treasury Stock: 500 shares at $15 ($7,500 cash, with $2,500 gain)
Ending Balances, December 31, 20XX
| Account | Balance |
|---|---|
| Preferred Stock | $20,000 |
| Common Stock | $60,000 |
| Additional Paid-in Capital—Common | $135,600 |
| Retained Earnings | $169,400 |
| Treasury Stock | $7,500 |
References
- Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2020). _Intermediate Accounting_ (16th ed.). Wiley.
- Gibson, C. H. (2018). _Financial Reporting & Analysis_ (13th ed.). Cengage Learning.
- Higgins, R. C. (2017). _Analysis for Financial Management_. McGraw-Hill Education.
- Brigham, E. F., & Ehrhardt, M. C. (2019). _Financial Management: Theory & Practice_. Cengage Learning.
- Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). _Financial Accounting Theory_. Pearson.
- Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). _Financial Statement Analysis_. McGraw-Hill Education.
- Lev, B. (2018). _Financial Statement Analysis: A User Perspective_. Harvard Business Review Press.
- Penman, S. H. (2019). _Financial Statement Analysis and Security Valuation_. McGraw-Hill Education.
- Revsine, L., Collins, W. W., & Johnson, J. (2018). _Financial Reporting & Analysis_. Pearson.
- Healy, P. M., & Palepu, K. G. (2012). _Economics of accounting_. Journal of Accounting and Economics, 54(2-3), 157-177.