Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, par value $11 per share, 12,700 shares authorized. During the year, the following selected transactions were completed:
| a. | Sold and issued 6,700 shares of common stock for cash at $22 per share. |
| b. | Sold and issued 1,600 shares of common stock for cash at $27 per share. |
| c. | At year-end, the accounts reflected income of $7,800. No dividends were declared. |
Required:
1. Prepare the journal entries required to record the sale of common stock in (a) and (b).
1.
a.
Cash = (6,700 shares × $22) = $147,400
Common stock = (6,700 shares × $11) = $73,700
b.
Cash = (1,600 shares × $27) = $43,200
Common stock = (1,600 shares × $11) = $17,600
2. Prepare the stockholders’ equity section as it should be reported on the year-end balance sheet.
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