During 2010, the Franco Corporation began operations and was authorized to issue 100,000 shares of 9%, $60 par value preferred stock and 1,000,000 shares of $5 par value common stock.The following transactions and events were completed during the first year.
Jan. 10 Issued 15,000 shares of preferred stock for $80 per share.
Mar. 1 Issued 200,000 shares of common stock for $11 per share.
Apr 1 Received an attorney's bill for services rendered in connection with the formation of the corporation, $48,000. Issued 4,000 shares of common stock to pay the bill.
May 1 Issued 3,500 shares of common stock for land that was advertised for sale at $55,000. The stock market price of the stock is $14 per share.
Aug . 1 Franco purchased 5,000 shares of its own common stock at $15 per share.
Sept. 1
Nov. 1 Sold 3,000 shares of treasury stock for $19 per share.
Issued 20,000 shares of preferred stock for a patent. The market value of the stock was $90 per share.
Dec. 31 Recorded the net income for the year, $750,000.
Instructions:
(a) Journalize the transactions and the closing entry for net income.
(b) Post the journal entries to the stockholders' equity accounts. (Use J1 as the posting reference.) Add accounts for Retained Earnings, Treasury Stock and Paid-In-Capital from Treasury Stock (you may use t-accounts if you wish.)
(c) Prepare the entire stockholders' equity section at December 31, 2010.