Preferred 1% Stock, $40 par (75,000 shares authorized,
45,000 shares issued) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,800,000
Paid-In Capital in Excess of Par—Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000
Common Stock, $12 par (2,000,000 shares authorized,
1,250,000 shares issued) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000
Paid-In Capital in Excess of Par—Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,750,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,450,000
During the year, the corporation completed a number of transactions affecting the stockholders’ equity. They are summarized as follows:
a. Issued 360,000 shares of common stock at $22, receiving cash.
b. Issued 14,000 shares of preferred 1% stock at $43.
c. Purchased 66,000 shares of treasury common for $18 per share.
d. Sold 51,000 shares of treasury common for $21 per share.
e. Sold 10,000 shares of treasury common for $16 per share.
f. Declared cash dividends of $0.40 per share on preferred stock and $0.03 per share on common stock.
g. Paid the cash dividends.
Instructions
Journalize the entries to record the transactions. Identify each entry by letter.
Answers:
a. Cash (360,000 shares × $22) 7,920,000
Common Stock (360,000 shares × $12) 4,320,000
Paid-In Capital in Excess of Par—Common
Stock [360,000 shares × ($22 – $12)] 3,600,000
b. Cash (14,000 shares × $43) 602,000
Preferred Stock (14,000 shares × $40) 560,000
Paid-In Capital in Excess of Par—Preferred
Stock [14,000 shares × ($43 – $40)] 42,000
c. Treasury Stock (66,000 shares × $18) 1,188,000
Cash 1,188,000
d. Cash (51,000 shares × $21) 1,071,000
Treasury Stock (51,000 shares × $18) 918,000
Paid-In Capital from Sale of Treasury Stock 153,000
[51,000 shares × ($21 – $18)]
e. Cash (10,000 shares × $16) 160,000
Paid-In Capital from Sale of Treasury Stock 20,000
[10,000 shares × ($18 – $16)]
Treasury Stock (10,000 shares × $18) 180,000
f. Cash Dividends {(59,000 shares × $0.40) + [(1,250,000 shares + 71,750
360,000 shares – 66,000 shares + 51,000 shares +
10,000 shares) × 0.03]}
Cash Dividends Payable 71,750
g. Cash Dividends Payable 71,750
Cash 71,750