The stockholders’ equity section of the balance sheet ofFrederick Mining Company is as follows:
Frederick MiningCompany
Equity Section ofBalance Sheet as of January 1, 2016
Common stock, $10 par value, 200,000 shares authorized; 120,000shares issued
1,200,000
Paid-in Capital in excess of par value
3,711,250
Retained Earnings
4,651,255
Total Equity
9,562,505
Create a journal entry (if needed) for each of the followingitems.
Prepare an updated equity section of the balance sheet as ofDecember 31, 2016.
1/28/16
Frederick Mining enters into a loan-modification agreement withthe bank, agreeing to appropriate $500,000 of retained earnings toloan repayment.
2/15/16
Frederick Mining board of directors declares a $1.50 per sharedividend payable on 3/31/2016 to shareholders of record as of3/15/2016. Frederick uses a dividends account to record dividendsdeclared.
3/31/16
Cash dividend declared on 2/15/2016 is paid.
7/22/16
Frederick Mining board of directors declares a 10% stockdividend to be paid 8/15/2016 to shareholders of record as of8/1/2016. The market value of the stock is $49 immediately prior tothe declaration.
8/15/16
Stock dividend declared on 7/22/16 is paid.
9/18/16
Frederick Mining buys back 5,000 shares of company stock on theopen market for $52 per share. The purchased shares are not retiredbut are held in treasury.
12/31/16
Close out dividends.
12/31/16
Frederick Mining had the following income and expense accountbalance as of 12/31/2016. Close out income.
Debit
Credit
Sales Revenue
6,890,000
Cost of Goods Sold
4,752,600
Administrative Salary Expense
436,500
Office Expense
118,560
Depreciation Expense
12,000
Transportation Expense
18,400
Interest Expense
82,800
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