Anne Cleves Company reported the following amounts in the stockholders\' equity

Question

Anne Cleves Company reported the following amounts in the stockholders' equity section of its December 31. 2013. balance sheet. During 2014. Cleves took part in the following transactions concerning Stockholders' equity. Paid the annuel 2013 $11 per share dividend on preferred Stock and a $4 per share dividend on common stock. These dividends had been declared on December 31. 2013. Purchased 1.600 shares of its own outstanding common stock for $39 per shore. Cleves uses the cost method. Reissued 700 treasury shares for land valued at $31,250. Issued 520 shares of preferred stock at $107 per shore. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per shore. Issued the stock dividend. Declared the annual 2014 $11 per share dividend on preferred stock and the $4 per share dividend on common stock. These dividends are payable in 2015. Prepare Journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered.

Explanation / Answer

Transaction no. Account Titles and Explanation Debit Credit 1. Dividend-preferred stock payable 24,200 Dividend-common stock payable 84,080 Cash 108,280 To record payment of preferred and common stock dividends 2. Treasury stock 62,400 Cash 62,400 To record purchase of 1,600 own shares at $ 39 per share 3. Land 31,250 Treasury stock 27,300 Additional paid-in capital - treasury stock 3,950 To record exchange of treasury stock for land 4. Cash 55,640 Preferred stock 52,000 Additional paid-in capital -preferred stock 3,640 To record issue of 520 preferred stock at $ 107 per share 5. Retained earnings 90,540 Common stock dividend distributable 10,060 Additional paid-in capital 80,480 To record declaration of 10% stock dividend 6. Common stock dividend distributable 10,060 Common stock 10,060 To record distribution of 2012 shares to the stockholders 7. Retained earnings 118,448 Dividends payable-preferred stock 29,920 Dividends payable - common stock 88,528 To record declaration of dividends @ $11 on preferred stock and @ $4 on common stock

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