Jan. 1. Announced a 4-for-1 common stock split, reducing the par value of the common stock to $1.00 per share. Mar. 30. Converted $100,000 face value of convertible bonds payable (the book value of the bond was $103,000) to common stock. Each $1,000 bond converted to 110 shares of common stock. June 1. Acquired equipment with a fair market value of $40,000 in exchange for 200 shares of preffered stock. Sept. 1. Acquired 10,000 shares of common stock for cash at $21 cash per share. Nov. 21 Issued 5,000 shares if common stock at $22 cash per share. Dec. 28. Sold 500 treasury shares at $23 per share. Dec. 31. Closed net income of $150,000 to the Retained Earnings account. Required: a. Set up T-accounts for the stockholders' equity accounts as of the beginning of the year and enter the January 1 balances. b. Prepare journal entries for the given transactions and post them to the T-accounts .

a.                            stockholder's Equity

DEBIT                          amount                                 CREDIT           amount

                                                             1 Jan                                    600000

                                                               bank                                   160000

                                                              bond                                    103000

                                                              bank                                     110000  balance c/d               973000                                                        

                                       bank                                                                                                              

stockholder's           160000

stockholder's           110000           balance c/d                                270000

                                        preferred stock                        

                                                     1 Jan                                            500000

                                                      equipment                                  40000

balance c/d               540000

                                          investment

bank                             210000           bank                                    11500

paid in excess             1000

                                              EQUIPMENT                                                                        

preferred stock              40000           balance c/d                            40000

                                       Retained earnings              

                                                       1 Jan                                              325000

 balance c/d             475000        net income                                    150000

                                      bond

DEBIT                        amount                                    CREDIT             amount

common stock          103000

                                          paid in excess

balance  c/d          1000                   investment                             1000

b. Journal entries  

split shares no entry needed just a memo note

mar 30 Debit bonds 103000 credit stockholder's equity 103000

june 1 Debit equipment 40000 credit preferred stock 40000

Sep 1 Investment 210000 credit bank 210000

Nov 21 bank 110000 credit stockholder's equity 110000

Debit bank 11500 credit investment 10500,  credit paid in excess 1000

Debit  net income ( income summary) 150000 credit Retained earnings 150000

Explanation:

the missing parts of the question;

The stockholders’ equity of Summit Corporation at January 1 follows:

7 Percent preferred stock, $100 par value, 20,000 shares authorized;

5,000 shares issued and outstanding$500,000

Common stock, $15 par value, 100,000 shares authorized;

40,000 shares issued and outstanding600,000

Paid-in capital in excess of par value—Preferred stock24,000

Paid-in capital in excess of par value—Common stock360,000

Retained earnings325,000

Total Stockholders’ Equity$1,809,000

The following transactions, among others, occurred during the year:

Jan.12Announced a 4-for-1 common stock split, reducing the par value of the common stock to $3.75 per share. The authorization was increased to 400,000 shares.

Mar.31Converted $40,000 face value of convertible bonds payable (the book value of the bonds was $43,000) to common stock. Each $1,000 bond converted to 125 shares of common stock.

June1Acquired equipment with a fair market value of $70,000 in exchange for 500 shares of preferred stock.

Sept.1Acquired 10,000 shares of common stock for cash at $10 per share.

Oct.12Sold 1,500 treasury shares at $12 per share.

Nov.21Issued 5,000 shares of common stock at $11 cash per share.

Dec.28Sold 1,200 treasury shares at $9 per share.

31Closed net income of $95,000 to the Retained Earnings account.