Reference no: EM131223346

Squires Inc. was organized on January 2, 2014 with authorized capital stock consisting of 40,000 shares of 10%, $200 par value preferred, and 300,000 shares of no-par, no stated value common. During the first two years of the company’s existence, the following selected transactions took place:

2014

Jan 2: Sold 15,000 shares of common stock at $14

Jan 2: Sold 4,000 shares of preferred stock at $211

Mar 2: Sold common stock as follows: 11,300 shares at $19; 3,900 shares at $24

Jul 10: Acquired a nearby piece of land, appraised at $500,000 for 800 shares of preferred stock and 34,000 common (preferred stock was recorded at $211, the balance being assigned to common)

Dec 16: Declared the regular preferred dividend and a $1.75 common dividend

Dec 28: Paid dividends on December 16

Dec 31: Assume that revenues and expenses were closed to a temporary account, Income Summary. The income summary account showed a credit balance of $600,000 which was transferred to retained earnings.

2015

Feb 27: Reacquired 11,000 shares of common stock at $18. The treasury stock is carried at cost. (State law requires that an appropriation of retained earnings be made for the purchase price of treasury stock. Appropriations are to be returned to Retained Earnings upon resale of the stock)

Jun 17: Resold 8,000 shares of the treasury stock at $21

Jul 31: Resold all of the remaining treasury stock at $16

Sep 30: Sold 17,000 additional shares of common stock at $22

Dec 16: Declared the regular preferred dividend and a $0.70 common dividend

Dec 28: Dividends declared on December 16 were paid

Dec 31: The income summary account showed a credit balance of $550,000 which was transferred to Retained Earnings.

Instructions:

Give the journal entries to record these transactions

Prepare the stockholders’ equity section of the balance sheet as of December 31, 2015.