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QUESTION SIX (17 marks) The following information and transactions took place during 2012:
QUESTION SIX (17 marks)
The following information and transactions took place during 2012:
Feb. 21
Issued 4,000 common shares in exchange for the following assets with the indicated reliable market values: land, $80,000; building $210,000; and machinery, $155,000.
March 25
Declared $2 per share cash dividend on 20,000 shares of common stock outstanding.
April 20 Paid the cash dividends declared on March 25.
Nov. 25 Issued 8,000 common shares at $9.50 per share.
Dec. 1 Declared a $2.50 per share cash dividend payable on January 2, 2013, to the Dec.13 shareholders of record.
Dec. 31 Prepared closing entries. The closing balance in the Income summary account is a credit for $52,000.
REQUIRED:
a) Prepare the journal entries for the above items. (14 marks)
b) If Retained Earnings had a $71,000 credit balance on December 31, 2011, calculate the balance in the Retained Earnings account at December 31, 2012.
(3 marks)
