36) An arbitrary value assigned to each share in the articles of incorporation Diff: 1 Type: MA Learning Outcome: A-03 Analyze and record transactions and their effect on the financial statements Skill: Knowledge Objective: 13-2 Record the issuance of shares and prepare the shareholders' equity section of a corporation's balance sheet
Answers: 31) D 32) A 33) G 34) B 35) E 36) C 37) Prepare a journal entry for each of the following transactions. a) Masters Corporation sells 10,000 common shares for $13.25 per share. b) Masters Corporation sells 5,000 shares of $5, cumulative preferred shares for $55 per share. c) Received a building with a market value of $160,000, and issued 6,400 common shares in exchange. d) Masters Corporation reports a net income for the current year of $56,000. Prepare the entry to close the income summary account. Date
Accounts
Debit
Credit
Answer: Date a)
Accounts
Debit 132,500
Credit
b) d) e)
Cash Common Shares Cash Preferred Shares Building Common Shares Income Summary Retained Earnings
132,500 275,000 275,000 160,000 160,000 56,000 56,000
Diff: 2 Type: SA Learning Outcome: A-14 Apply basic accounting methods to record and evaluate share transactions, cash and stock dividends, and stock splits Skill: Application Objective: 13-2 Record the issuance of shares and prepare the shareholders' equity section of a corporation's balance sheet
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