Financial Accounting

The stockholders’ equity accounts of Castel Corporation on January 1, 2015, were as follows:

Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized) ; $400,000

Common Stock ($1 stated value, 2,000,000 shares authorized)

$1,000,000

Paid-in Capital in Excess of Par – Preferred Stock

$100,000

Paid-in Capital in Excess of Stated Value – Common Stock

$1,450,000

Retained Earnings

$1,816,000

Treasury Stock (10,000 common stock)

$50,000

During 2015, the corporation had the following transaction and events pertaining to its stockholders’ equity.

Feb 1 Issued 25,000 shares of common stock for $120,000

Apr 14 Sold 6,000 shares of treasury stock – common for $33,000

Sep 3 Issued 5,000 shares of common stock for a patent valued at $35,000

Nov 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000

Dec 31 Determined that net income for the year was $452,000

No dividends were declared during the year.

Instructions:

a) ; Journalize the transactions and the closing entry for net income

b) ; Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts (Use J5 for the posting reference)

c) ; Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of the preferred dividends in arrears.