Financial Accounting 202-Instructor: HarrisExam 3A Winter 2018 B. Northwest Clot

Question

Financial Accounting 202-Instructor: HarrisExam 3A Winter 2018 B. Northwest Clothing Supply has the following transactions during the year to stockholders' equity: At the beginning of the year it has 3000 shares common stock and 450 shares of preferred stock outstanding.(21 points) January 1 related of Issues 3,000 shares of no-par value common stock for S30 per share. Board meets and establishes a par value of $15 per share for common stock and S25 per share for 8% February 5 preferred stock. Issues 800 shares of $25 par value March 15 July1 September 30 November 1 November 15 preferred stock for $32 per share. repurchases 1600 shares for $25 per share Reissues 500 shares for $18 per share. Reissues 900 shares for $28 per share Declares a cash dividend of $3.50 per share to all stock holders of record on October 20 Pays the cash dividend declared on December 19 November 15 Record each of these transactions GENERAL JOURNAL PAGE POST REF. DEBIT CREDIT DATE DESCRIPTION

Explanation / Answer

Ans B) Journal entries are as follows: Sl No. Date Particulars Debit Amount($) Credit Amount($) 1 Jan-01 Cash A/c Dr.                       90,000    To common Stock                        90,000 2 Feb-05 Common Stock Dr.                       45,000    To Additional Paid in Capital A/c                        45,000 Preferred Stock A/c Dr.                       11,250    To 8% Preferred Stock                        11,250 3 Mar-15 Cash A/c Dr.                       25,600    To Preferred Stock                        20,000    To Additional Paid-In Capital                          5,600 4 Jul-01 Treasury Stock A/c Dr.                       40,000     To Cash A/c                        40,000 5 Sep-30 Cash A/c Dr. (500*18)                          9,000 Retained Earnings A/c Dr. (500*7)                          3,500    To Treasury Stock A/c                        12,500 6 Nov-01 Cash A/c Dr (900*28)                       25,200    To Treasury Stock A/c(900*25)                        22,500    To Additional Paid in Capital A/c(900*3)                          2,700 7 Nov-15 Retained Earnings A/c Dr {(3000+800-1600+1400)*3.5}                       12,600 To dividends payable A/c                        12,600 8 Dec-19 Dividend Payable A/c Dr.                       12,600 To Cash A/c                        12,600 Ans 1) Journal entries: Sl No. Date Particulars Debit Amount($) Credit Amount($) 1 Jan-01 Cash A/c Dr.                 30,00,000    To common Stock                    2,00,000    To Additional Paid-In-Capital A/c                  28,00,000 2 Feb-06 Cash A/c Dr.                       11,000    To Preferred Stock                        10,000    To Additional Paid-In-Capital A/c                          1,000 3 Oct-10 Treasury Stock A/c Dr.                    1,80,000     To Cash A/c                    1,80,000 (Being repurchase of 10000shares of coomon stock at $18) 4 Cash A/c Dr (5000*20)                    1,00,000    To Treasury Stock A/c(5000*18)                        90,000    To Additional Paid in Capital A/c(5000*2)                        10,000 (Being Reissue of 5000 Treasury Stock at $20)

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