The following are the transactions for Smiley, Inc. The following are the transa

Question

The following are the transactions for Smiley, Inc.


The following are the transactions for Smiley, Inc.



1.The company is authorized to sell 1,000,000 shares of $10 par value common stock and 50,000 shares of $100 par value 6 percent preferred stock.


2.As of the end of the current year, the company has actually sold 550,000 shares of common stock at $12 per share


3. It has also sold 40,000 shares of preferred stock at $110 per share.


4. 40,000 shares have been repurchased at $60 per share and are currently being held in treasury to be used to meet the future requirements of a stock option plan that the company intends to implement.



a.Prepare the general journal entries required to record all of the above transactions. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Explanation / Answer

1. No entry required. 2. par value = 550,000*10 = 5,500,000 cash received 550,000*12 = 6,600,000 Debit: Cash 6,600,000 Credit: Common stock 5,500,000 Credit: Paid in capital in excess of par, common stock 1,100,000 3. par value = 100*40,000 = 4,000,000 cash received = 110*40,000 = 4,400,000 Debit: Cash 4,400,000 Credit: Preferred stock 4,000,000 Credit: Paid in capital in excess of par, preferred stock 400,000 4. 40,000*60 = 2,400,000 Debit: Treasury stock 2,400,000 Credit: Cash 2,400,000

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