Trane Comfort Specialists, Inc. reported the following stockholders\' equity on
ID: 2420659 • Letter: T
Question
Trane Comfort Specialists, Inc. reported the following stockholders' equity on its balance sheet at June 30, 2014: Identify the different classes of stock that Trane has outstanding. What is the par value per share of Trane's preferred stock? Make two summary journal entnes to record issuance of all the Trane stock for cash. Explanations are not required. No preferred dividends are in arrears. Journalize the declaration of a $500,000 dividend at June 30, 2014, and the payment of the dividend on July 20, 2014. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.Explanation / Answer
1.There are two classes of stock
a.Preferred stock
b.Common stock
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2.Par value of Preferred stock= Preffered stock capital/No of preferred stock outstanding
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=1,200,000/240,000=$5
3. Dr Cash 2,510,000
Cr Preffered stock 1,200,000
Cr Common Stock 1,310,0000
4.June 30,2014
Delcaration of dividend
Dr Retained Earnings $500,000
Cr Common Stock Dividend payable $500,000
4.June 30,2014
Delcaration of dividend
Dr Retained Earnings $84,000
Cr Preffred Stock Dividend payable $84,000
6. July 20,2014
Payment of dividend
Dr Common Stock Dividend payable $500,000
Dr Preffered Stock Dividend payable $ 84,000
Cr Cash $584,000
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