In January 2014 Vanowski Corporation was organized and autho

In January 2014, Vanowski Corporation was organized and authorized to issue 2,000,000 shares of no-par common stock and 50,000 shares of 5 percent, $50 par value, noncumulative preferred stock. The stock-related transactions for the first year\'s operations follow.

Jan. 19    Sold 15,000 shares of common stock for $31,500. State law requires a minimum of $1 stated value per share.

Jan. 21    Issued 5,000 shares of common stock to attorneys and accountants for services valued at $11,000 and provided during the organization of the corporation.

Feb. 7    Issued 30,000 shares of common stock for a building that had an appraised value of $78,000.

Mar. 22    Purchased 10,000 shares of its common stock at $3 per share.

July 15    Issued 5,000 shares of common stock to employees under a stock option plan that allows any employee to buy shares at the current market price, which is now $3 per share.

Aug. 1    Sold 2,500 shares of treasury stock for $4 per share.

Sept. 1    Declared a cash dividend of $0.15 per common share to be paid on September 25 to stockholders of record on September 15.

Sept. 15    Date of record for cash dividends.

Sept. 25    Paid cash dividends to stockholders of record on September 15.

Oct. 30    Issued 4,000 shares of common stock for a piece of land. The stock was selling for $3 per share, and the land had a fair market value of $12,000.

Dec. 15    Issued 2,200 shares of preferred stock for $50 per share.

REQUIRED

1. For each of these transactions, indicate the account numbers and dollar amounts for the account(s) debited and credited, using the account numbers that follow.

110 Cash

120 Land

121 Building

220 Dividends Payable

305 Preferred Stock

310 Common Stock

312 Additional Paid-in Capital

313 Paid-in Capital, Treasury Stock

340 Retained Earnings

341 Dividends

350 Treasury Stock, Common

510 Start-up and Organization Costs

2.  BUSINESS APPLICATION > Why is the stockholders\' equity section of the balance sheet an important consideration in analyzing the performance of a company?

Solution

1) Journal Entries Account Date Transaction Debited Credited Account Number Dollar Amount Account Number Dollar Amount Jan.19 Sold 15,000 shares of common stock for $31,500. State law requires a minimum of $1 stated value per share. 110 $31,500.00 310 $15,000.00 312 $16,500.00 Jan. 21 Issued 5,000 shares of common stock to attorneys and accountants for services valued at $11,000 and provided during the organization of the corporation. 510 $11,000.00 310 $5,000.00 312 $6,000.00 Feb.7 Issued 30,000 shares of common stock for a building that had an appraised value of $78,000. 121 $78,000.00 310 $30,000.00 312 $48,000.00 Mar. 22 Purchased 10,000 shares of its common stock at $3 per share. 350 $30,000.00 110 $30,000.00 Jul.15 Issued 5,000 shares of common stock to employees under a stock option plan that allows any employee to buy shares at the current market price, which is now $3 per share. 110 $15,000.00 350 $15,000.00 Aug. 1 Sold 2,500 shares of treasury stock for $4 per share. 110 $10,000.00 350 $7,500.00 313 $2,500.00 Sept.1 Declared a cash dividend of $0.15 per common share to be paid on September 25 to stockholders of record on September 15. 341 $7,125.00 320 $7,125.00 Sept.15 Date of record for cash dividends No entry Sept.25 Paid cash dividends to stockholders of record on September 15. 320 $7,125.00 110 $7,125.00 Oct.30 Issued 4,000 shares of common stock for a piece of land. The stock was selling for $3 per share, and the land had a fair market value of $12,000. 120 $12,000.00 310 $4,000.00 312 $8,000.00 Dec.15 Issued 2,200 shares of preferred stock for $50 per share. 110 $110,000.00 305 $110,000.00