Reference no: EM133136276
Question - Sun Corporation received a charter that authorized the issuance of 105,000 shares of $5 par common stock and 21,000 shares of $100 par, 6 percent cumulative preferred stock. Sun Corporation completed the following transactions during its first two years of operation.
Year 1
January 5 Sold 15,750 shares of the $5 par common stock for $7 per share.
January 12 Sold 2,100 shares of the 6 percent preferred stock for $110 per share.
April 5 Sold 21,000 shares of the $5 par common stock for $9 per share.
December 31 During the year, earned $300,500 in cash revenue and paid $241,900 for cash operating expenses.
December 31 Declared the cash dividend on the outstanding shares of preferred stock for Year 1. The dividend will be paid on February 15 to stockholders of record on January 10, Year 2.
December 31 Closed the revenue, expense, and dividend accounts to the retained earnings account.
Year 2
February 15 Paid the cash dividend declared on December 31, Year 1.
March 3 Sold 3,150 shares of the $100 par preferred stock for $120 per share.
May 5 Purchased 450 shares of the common stock as treasury stock at $10 per share.
December 31 During the year, earned $254,400 in cash revenues and paid $173,000 for cash operating expenses.
December 31 Declared the annual dividend on the preferred stock and a $0.50 per share dividend on the common stock.
December 31 Closed revenue, expense, and dividend accounts to the retained earnings account.
Required -
a. Prepare journal entries for these transactions for Year 1 and Year 2 and post them to T-accounts.
b. Post the entries to T-accounts Year 1.
c. Post the entries to T-accounts Year 2.