Earned net income of 56000 and declared and paid cash

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Reference no: EM13566872

Networking Solutions Inc. began operations on January 1, 2011, and immediately issued its shares, receiving cash. A-1's balance sheet at December 31, 2011, reported the following shareholders' equity:

Common shares ................................................................................ $249,500

Contributed surplus.......................................................................... 800

Retained earnings.............................................................................. 38,000

Total shareholders' equity ................................................................. $288,300

During 2011, A-1

a. Issued 50,000 common shares for $5 per share

b. Repurchased 800 of its own common shares for cancellation, paying $4 per share

c. Issued common shares for $7 each

d. Earned net income of $56,000 and declared and paid cash dividends. Revenues were $171,000 and expenses totalled $115,000.

Required

Journalize all A-1's shareholders' equity transactions during the year. A-1's entry in part (d) to close net income to Retained Earnings was:

Revenues 171,000

Expenses 115,000

Retained Earnings 56,000

Reference no: EM13566872

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