journalize the transactions and the closing entry for net income 581396

The stockholders’ equity accounts of Motz Inc., at January 1, 2012, are as follows.

Preferred Stock, $100 par, 7%

$600,000

Common Stock, $10 par

900,000

Paid in Capital in Excess of Par—Preferred Stock

100,000

Paid in Capital in Excess of Par—Common Stock

200,000

Retained Earnings

500,000

There were no dividends in arrears on preferred stock. During 2012, the company had the following transactions and events.

July

1

Declared a $0.50 cash dividend on common stock.

Aug.

1

Discovered a $72,000 overstatement of 2011 depreciation on equipment. Ignore income

taxes.

Sept.

1

Paid the cash dividend declared on July 1.

Dec.

1

Declared a 10% stock dividend on common stock when the market value of the stock

was $16 per share.

15

Declared a 7% cash dividend on preferred stock payable January 31, 2013.

31

Determined that net income for the year was $350,000.

Instructions

(a) Journalize the transactions and the closing entry for net income.

(b) Enter the beginning balances in the accounts and post to the stockholders’ equity accounts.

(c) Prepare a retained earnings statement for the year.

(d) Prepare a stockholders’ equity section at December 31, 2012.