Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, $17 par value, 11,500 shares authorized. During the year, the following selected transactions were completed: a. Sold 5,800 shares of common stock for cash at $34 per share. b. Sold 2,200 shares of common stock for cash at $39 per share. c. At year-end, the accounts reflected income of $7,300. No dividends were declared.

Find the requirement below:

1. Prepare the journal entries required to record the sale of common stock in (a) and (b). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the stockholders’ equity section as it should be reported on the year-end balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

First issue of shares:

Dr   Cash     $197,200

Cr Common stock                           $98,600

Cr Paid-in capital in excess of par  $98,600

Second  issue of shares:

Dr   Cash     $85,800

Cr Common stock                           $37,400

Cr Paid-in capital in excess of par  $48,400

Shareholders equity section:

Common stock ($98,600+$37,400)                $136,000

Paid in capital ($98,600+$48,400)                  $147,000

Retained earnings                                              $7,300

Total shareholders' equity                                 $290,300

Explanation:

First issue of shares:

cash proceeds 5,800*$34=$197,200.00  

split into    common stock  $17*5,800=$98,600.00  

                 paid-in capital in excess of par ($197,200-$98,600)= $98,600.00  

second  issue of shares:

cash proceeds 2,200*$39=$ 85,800.00  

split into    common stock  $17*2200=$ 37,400.00  

                 paid-in capital in excess of par ($85,800-$37,400)= $48,400.00