MI Air, Inc. engages in the following common stock transactions in 2017 for its $1 par value common stock. The firm earned $200 of net income during…

MI Air, Inc. engages in the following common stock transactions in 2017 for its $1 par value common stock. The firm earned $200 of net income during 2017, its first year of business.

January 1—Issued 200 shares to an investor for $8 per share.

December 1—Purchased 40 of the shares sold to the investor for $10 per share, and placed them in the corporate treasury. 

December 10—Issued 75 shares to another investor at $9 per share in order to secure additional financing for the firm.

December 12—Issued 30 of the treasury shares when the market price was $11 per share.

December 15—Declared a $.20 per share dividend.

December 31—Paid the dividend declared on December 15.

Requirements: (Use T accounts as necessary to track account balances)

  • Journalize the above transactions.
  • Present the effects of the stock transactions on MI Air’s 2017 income statement,
  • Report stockholders’ equity on the company’s December 31, 2017 balance sheet.

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