The stockholders’ equity accounts of Castel Corporation on January 1, 2015, were as follows:
Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized) $400,000
Common Stock ($1 stated value, 2,000,000 shares authorized)
Paid-in Capital in Excess of Par – Preferred Stock
Paid-in Capital in Excess of Stated Value – Common Stock
Treasury Stock (10,000 common stock)
During 2015, the corporation had the following transaction and events pertaining to its stockholders’ equity.
Feb 1 Issued 25,000 shares of common stock for $120,000
Apr 14 Sold 6,000 shares of treasury stock – common for $33,000
Sep 3 Issued 5,000 shares of common stock for a patent valued at $35,000
Nov 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000
Dec 31 Determined that net income for the year was $452,000
No dividends were declared during the year.
a) Journalize the transactions and the closing entry for net income
b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts (Use J5 for the posting reference)
c) Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of the preferred dividends in arrears.