The following transactions relate to Penelope Inc. Prepare journal entries for each transaction. Prepare the equity section of the balance sheet at each year-end, December 31. Assume 2013 was Penelope’s first year of operations. 1.Penelope issued 1,000 shares of $1 par value common stock for $70 per share on January 1, 2013. DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 1/1/13 2.Penelope issued 500 shares of no par value, $5, non-cumulative preferred stock for $50 per share on January 1, 2013. DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 1/1/13 1.Penelope reported net income of $2,000 during 2013 and paid no dividends. Prepare the company’s equity section of the December 31, 2013, balance sheet. Stockholders’ Equity: Total Stockholders’ Equity 2.On January 1, 2014, Penelope purchased 200 shares of its common stock for $60 per share. DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 1/1/14 3.On December 15, 2014, Penelope declared and paid dividends totaling $6,600 during 2014. Prepare the company’s equity section from December 31, 2014. DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 12/15/14 Class of Stock Total Dividend Dividend Per Share Preferred Common 4.Penelope reported net income of $20,000 during 2014. Prepare the company’s stockholders’ equity section of the December 31, 2014, balance sheet. Stockholders’ Equity: Total Stockholders’ Equity DATE ACCOUNT NAME DEBIT CREDIT BALANCE SHEET INCOME STMT A = L + E R - E 1/1/13 Solution 1)a. Cash Debit 70,000 [70 * 1000] Common sto credit 1,000 [1* 1000 ] Additional paid in capital credit 69,000 [69* 1000] [being common stock issued at premium recorded] Asset = liabilities + equity + 70,000 = 0 + +70,000 1b) cash Debit 25,000 [500*50] Preferred stock credit 25,000 [Being preferred stock issued recorded] 1c)Stockholders equity 2) Treasury stock Debit 12,000 [60*200] cash credit 12,000 [being stock repurchased recorded] Asset = Liabilities + equity - 12000 = 0 + (- )12000 3)Retained earnings Debit 6,600 Preferred stock dividend payable credit 2500 [5*500 ] Common stock dividend payable credit 4100 [6600 -2500] [being dividend declared recorded] b)Preferred stock dividend payable Debit 2500 [5*500 ] Common stock dividend payable Debit 4100 cash credit 6600 [being dividend paid recorded] 4)Preferred stock25,000Common stock1,000Additional paid in capital -common stock69,000Retained earnings2,000stockholders equity97,000.

1. The following transactions relate to Penelope Inc. Prepare journal entries for each transaction.
Prepare the equity section of the balance sheet at each year-end, December 31. Assume 2013 was
Penelope’s first year of operations.
1.Penelope issued 1,000 shares of $1 par value common stock for $70 per share on January 1,
2013.
DATE
ACCOUNT NAME
DEBIT
CREDIT
BALANCE SHEET
INCOME STMT
A
=
L
+
E
R
-
E
1/1/13
2.Penelope issued 500 shares of no par value, $5, non-cumulative preferred stock for $50 per
share on January 1, 2013.
DATE
ACCOUNT NAME
DEBIT
CREDIT
BALANCE SHEET
INCOME STMT
A
=
L
+
E
R
-

2. E
1/1/13
1.Penelope reported net income of $2,000 during 2013 and paid no dividends. Prepare the
company’s equity section of the December 31, 2013, balance sheet.
Stockholders’ Equity:
Total Stockholders’
Equity
2.On January 1, 2014, Penelope purchased 200 shares of its common stock for $60 per share.
DATE
ACCOUNT NAME
DEBIT
CREDIT
BALANCE SHEET
INCOME STMT
A
=
L
+
E
R
-
E
1/1/14
3.On December 15, 2014, Penelope declared and paid dividends totaling $6,600 during 2014.
Prepare the company’s equity section from December 31, 2014.
DATE
ACCOUNT NAME
DEBIT
CREDIT
BALANCE SHEET
INCOME STMT

3. A
=
L
+
E
R
-
E
12/15/14
Class of Stock Total Dividend Dividend Per Share
Preferred
Common
4.Penelope reported net income of $20,000 during 2014. Prepare the company’s stockholders’
equity section of the December 31, 2014, balance sheet.
Stockholders’ Equity:
Total Stockholders’
Equity
DATE
ACCOUNT NAME
DEBIT
CREDIT
BALANCE SHEET
INCOME STMT
A
=
L
+
E
R
-
E

4. 1/1/13
Solution
1)a.
Cash Debit 70,000 [70 * 1000]
Common sto credit 1,000 [1* 1000 ]
Additional paid in capital credit 69,000 [69* 1000]
[being common stock issued at premium recorded]
Asset = liabilities + equity
+ 70,000 = 0 + +70,000
1b) cash Debit 25,000 [500*50]
Preferred stock credit 25,000
[Being preferred stock issued recorded]
1c)Stockholders equity
2) Treasury stock Debit 12,000 [60*200]
cash credit 12,000
[being stock repurchased recorded]
Asset = Liabilities + equity
- 12000 = 0 + (- )12000
3)Retained earnings Debit 6,600
Preferred stock dividend payable credit 2500 [5*500 ]
Common stock dividend payable credit 4100 [6600 -2500]
[being dividend declared recorded]
b)Preferred stock dividend payable Debit 2500 [5*500 ]
Common stock dividend payable Debit 4100
cash credit 6600
[being dividend paid recorded]
4)Preferred stock25,000Common stock1,000Additional paid in capital -common
stock69,000Retained earnings2,000stockholders equity97,000