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Prepare the closing entry at december for net income

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Reference no: EM132547816

Fechter Corporation had the following stockholders' equity accounts on January 1, 2020: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par-Common Stock$200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury stock transactions.

Mar. 1 Purchased 5,000 shares at $8 per share.

June 1 Sold 1,000 shares at $12 per share.

Sept. 1 Sold 2,000 shares at $10 per share.

Dec. 1 Sold 1,000 shares at $7 per share.

  • Fechter Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported net income of $30,000.

Instructions

Question (a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income.

Question (b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings (Post to T-accounts). Using J10 as the posting reference.

Question (c) Prepare the stockholders' equity section for Fechter Corporation at December 31, 2020.

Reference no: EM132547816

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