Req. 1Journal EntryJournal EntryJournal EntryDATE2009Retained earningsJournalTreasury stock (1,000 × $13)Journal Entry2012P12-30A 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:Requirements1. 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.(15-20 min.) P 12-30AReq. 1Journal Entry ACCOUNTS AND EXPLANATIONS DEBIT CREDITa. Cash 52,000Preferred stock (1,300 × $40) 52,000b. Cash (2,400 × $5) 12,000Common stock (2,400 × $1) 2,400Paid-in capital in excess of par-common9,600c. Income summary 74,000Retained earnings 74,000Req. 2 Lincoln-Priest, Inc.Stockholders’ EquityDecember 31, 2012Paid-in capital:Preferred stock, 7%, $40 par, 110,000 shares authorized, 1,300 shares issued $ 52,000Common stock, $1 par, 520,000 shares authorized, 63,400* shares issued and outstanding63,400Paid-in capital in excess of par- common ($41,000 + $9,600) 50,600 Total paid-in capital $166,000Retained earnings ($29,000 + $74,000) 103,000 Total stockholders’ equity $269,000*61,000 + 2,400 = 63,400 sharesP12-32A 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.Requirements1. Compute the total dividends to preferred and to common for each of the three years ifa. preferred is noncumulative.b. preferred is cumulative.2. For requirement 1.b., journalize the declaration of the 2012dividends on December 22, 2012, and payment on January 14, 2013. Use separate Dividends payable accounts for preferred and common. (15-20 min.) P 12-32AReq. 1a. Noncummulative:2010 dividend of $3,000:Preferred dividend* $3,000Common dividend 0Total dividend $3,000*10,000 x $20 par x 3% = $6,000 2010 Dividends = (3,000) 2010 Dividends not paid (noncumulative) = $3,000 2011 dividend of $13,000:Preferred dividend $6,000Common dividend 7,000Total dividend $13,0002012 dividend of $17,000:Preferred dividend $6,000Common dividend 11,000Total dividend $17,000b. Cumulative:2010 dividend of $3,000:Preferred dividend* $3,000Common dividend 0Total dividend $3,000*10,000 x $20 par x 3% = $6,000 2010 Dividends = (3,000) 2010 Dividends in arrears = $3,000 2011 dividend of $13,000:Preferred dividend* $9,000Common dividend 4,000Total dividend $13,000*2011 dividend of $6,000 + 2010 arrearage of $3,000= $9,0002012 dividend of $17,000:Preferred dividend $6,000Common dividend 11,000Total dividend $17,000Req. 2 for 1b.Journal EntryDATEACCOUNTS AND EXPLANATIONS.DEBIT CREDIT2012 Dec 22 Retained earnings 17,000 Dividends payable, preferred6,000 Dividends payable, common11,0002013Jan 14Dividends payable, preferred6,000Dividends payable, common11,000 Cash17,000P13-24A - Summerborn Manufacturing, Co - ACC206 - Principles of Accounting II- AUP13-24A Journalizing stockholders’ equity transactions [20–25 min]Summerborn Manufacturing, Co., completed the following transactions during 2012:Requirement1. Record the transactions in Summerborn's general journal.(20-25 min.) P 13-24AReq. 1Journal EntryDATEACCOUNTS AND EXPLANATIONSPOST.REF. DEBIT CREDIT2009Jan 16Retained earnings28,500Dividends payable, preferred(900 × .05 x $100)4,500Dividends payable, common(80,000 × $.30) 24,000Declared a cash dividend.Feb 15 Dividends payable, preferred 4,500Dividends payable, common 24,000Cash 28,500Paid a cash dividend.Jun 10Split the common stock 2 for 1 OLD: 80,000 shares issued and outstanding, $6 parNEW: 160,000 shares issued and outstanding, $3 parJul 30 Retained earnings(160,000 × .50 × $3 par)240,000Common stock240,000Distributed a stock dividend.JournalDATE ACCOUNTS AND EXPLANATIONSPOST.REF. DEBIT CREDITOct 26Treasury stock (1,000 × $13)13,000Cash 13,000Purchased treasury stock.Nov 8 Cash (500 × $15) 7,500Treasury stock (500 × $13)6,500Paid-in capital from treasurystock transactions 1,000Sold treasury stock.Nov 30 Cash (300 × $8) 2,400Paid-in capital from treasury stock transactions1,000Retained earnings 500Treasury stock (300 × $13)3,900Sold treasury stock.P13-25A - Lennox Health Foods - ACC206 - Principles of Accounting II - AUP13-25A 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:Mar 15 Purchased 9,000 shares of treasury stock at $8 per share.Apr 30 Distributed a 10% stock dividend on the outstanding shares of common stock.The market value of common stock was $9 per share. Dec 31 Earned net income of $110,000 during the year. Closed net income to Retained earnings.Requirements1. Record the transactions in the general journal. Explanations are not required.2. Prepare the stockholders’ equity section of Lennox Health Foods’ balance sheet at December 31, 2012.(10-30 min.) P 13-25AReq. 1Journal EntryDATE ACCOUNTS AND EXPLANATIONSPOST.REF. DEBIT CREDIT2012Mar 15 Treasury stock (9,000 × $8) 72,000Cash 72,000Apr 30 Retained earnings(16,000* × .10 × $9)14,400Common stock 14,400Dec 31Income summary110,000Retained earnings110,000*25,000 – 9,000 treasury = 16,000 shares outstandingReq. 2Stockholders’ Equity at December 31, 2012Paid-in capital:Common stock, no-par, 120,000 shares authorized, 26,600* shares issued($190,000 + $14,400) $204,400 Total paid-in capital 204,400Retained earnings ($115,000 − $14,400 + $110,000) 210,600Treasury stock, common (9,000 shares at cost) (72,000 )Total