Journalizing the transaction-events-closing entries

Reference no: EM13131709

The stockholders' equity accounts of Hashmi Company at January 1, 2010, are as follows:

Preferred stock, 6%,$50par $600,000
Common Stock, $5par $800,000
Paid-in capital in excess of par value-preferred stock $200,000
Paid-in capital in excess of par value-common stock $300,000
Retained Earnings $800,000

There were no dividends in arrears on preferred stock. During 2010, the company had the following transactions and events

July 1 Declared a $0.50 cash dividend on common stock
Aug 1 Discovered $25,000 understatement of 2009 depreciation. Ignore income taxes
Sept 1 Paid the cash dividend declared on July 1
Dec 1 Declared a 10% stock dividend on common stock when the market value of the stock was $18 per share
Dec 15 Declared a 6% cash dividend on preferred stock payable January 15, 2010
Dec 31 Determined that the net income for the year was $355,000
Dec 31 Recognized a $200,000 restriction of retained earnings for plant expansion

Instruction:

a) Journalize the transaction, events, and closing entries

b) Enter the beginning balances in the accounts, and post to the stockholders' equity accounts

c) Prepare a retained earnings statement for the year

d) Prepare a stockholders' equity section at December 31,3010

Reference no: EM13131709

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