Reference no: EM132025700

Question - On December 31, 2014, Flimsy Incorporated, had the following balances (all balances are normal):

Accounts - Amount

Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding) - $1,000,000

Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding) - $1,000,000

Paid-in Capital in Excess of par, Common - 150,000

Retained Earnings - 700,000

The following events occurred during 2014 and were not recorded:

a. On January 1, Flimsy declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.

b. On February 15, Flimsy reacquired 1,000 shares of common stock for $20 each.

c. On March 31, Flimsy reissued 250 shares of treasury stock for $25 each.

d. On July 1, Flimsy reissued 500 shares of treasury stock for $16 each.

e. On October 1, Flimsy declared full year dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15.

f. One December 15, Flimsy split common stock 2 shares for 1.

g. Net Income for 2014 was $275,000.

Requirements:

a. Prepare journal entries for the transactions listed above.

b. Prepare a Stockholders' section of a classified balance sheet as of December 31, 2014.

(Hint: use the account balances provided above and adjust the balances to reflect the transactions recorded in a-g to get the account balances after those transactions are recorded. Use the final balances to prepare the stockholders' section of the balance sheet.)