After looking into debt financing through notes, mortgage,…
After looking into debt financing through notes, mortgage, and bonds payable, Horns Up Company (the Company) decides to raise additional capital for a planned business expansion. The Company will be able to acquire cash and land adjacent to its current business location. Before the following transactions, the balance in Common Stock on January 1, 2028, was $240,000 and included 120,000 shares of common stock issued and outstanding. (There was no Paid-In Capital in Excess of Par—Common.) Horns Up Company had the following transactions in 2028: Jan. 1 Issued 100,000 shares of $2 par value common stock for a total of $1,200,000. Jan. 10 Issued 90,000 shares of 5%, $7 par value preferred stock in exchange for land with a fair value of $1,350,000. Dec. 15 Declared total cash dividends of $50,000. Dec. 20 Declared a 5% common stock dividend when the market value of the stock was $13.00 per share. Dec. 31 Paid the cash dividends. Dec. 31 Distributed the stock dividend. REQUIREMENTS: Journalize the transactions above in the “Problem #2, Requirement #1 – Transaction Journal” on the following page. Include explanations. Calculate the balance in Retained Earnings on December 31, 2028, in the space below. Assume the balance on January 1, 2028, was $6,500 and net income for the year was $427,000. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2028, in the space provided on the page following the Transaction Journal (Problem #2, Requirement #3 – Stockholders’ Equity section of the Balance Sheet). There was no preferred stock issued prior to the 2028 transactions.