The Byrd Company\'s Contributed Capital section of its January 1, 2010 balance s
ID: 2442586 • Letter: T
Question
The Byrd Company's Contributed Capital section of its January 1, 2010 balance sheet is as follows:
Preferred Stock (6%, $50 par, 8000 shares authorized, 3,400 shares issued and outstanding) $170,000
Common stock ($10 stated value, 30,000 shares authorized, 12,000 shares issued and outstanding) $120,000
Preferred stock subscribed (800 shares subscribed at $54 per share) $40000
Additional paid-in-capital on preferred stock $12800
Additional paid-in capital on common stock $72000
$414,800
During 2010, the company entered into the following transactions:
Jan 4 Established a compensatory share option plan for its key executives. The options vest after three-year service period. The estimated fair value of the options expected to be exercised is $81000.
Mar. 5 Received the remaining $40 per share on the subscribed preferred stock and issued the shares.
Apr 23 Sold 300 shares of preferred stock at $55 per share.
May 4 Received a subscription down payment of $6 per share on 1,000 shares of common stock. The remaining $11 per share balance is due in 60 days.
June 7 Sold 600 shares of common stock at $17 per share.
July 2 Received the remaining balance on subscribed common stock and issued the shares.
Sept 21 Purchased building by paying $9000 cash and issuing 800 shares of common stock and 450 shares of preferred stock. Common and preferred stock are currently selling for $19 and $57 per share, respectively.
Oct 12 Reacquired 900 shares of common stock at $19.50 per share. The company uses the cost method to account for treasury stock.
Nov 15 Issued for $32000 a combination of 700 shares of common stock and 12% bonds with a face value of $20000. “The common stock is currently selling for $18 per share. No market value exists for the bonds.
Dec. 14 Reissued the 900 shares of treasury stock at $20.50 per share.
Dec. 28 Distributed a $3 per share dividend to all outstanding preferred stock and a $1.50 per share dividend to all common stock outstanding on this date (debit Retained Earnings and credit Cash for each dividend).
Dec. 31 Declared a two-for-one stock split on the common stock, reducing the stated value to $4 per share and increasing the authorized shares to 60000.
Required:
1. Prepare journal entries to record the preceding transactions.
2. Prepare the Contributed Capital section of Byrd’s December 31, 2010 balance sheet.
Explanation / Answer
1 a No journal entry required b Subscribed Preferred stock 32,000.00 Preferred Stock-issued and Outstanding 32,000.00 c Cash 16,500.00 Preferred Stock 15,000.00 Additional Paid in Capital-Preferred Stock 1,500.00 d Cash 6,000.00 Subscribed Common Stock 6,000.00 e Cash 10,200.00 CommonStock 10,200.00 f Cash 11,000.00 Subscribed Equity Stock 6,000.00 Common Stock 17,000.00 g Building 49,850.00 Cash 9,000.00 Common Stock 13,600.00 Preferred Stock 22,500.00 Additional Paid in Capital-Equity 1,600.00 Additional Paid in Capital-Preferred 3,150.00 h Treasury Stock 17,550.00 Cash 17,550.00 i Cash 32,000.00 Discount on Bonds Payable 600.00 Common Stock 11,900.00 Additional Paid in Capital-Equity 700.00 Bonds Payable 20,000.00 j Cash 18,450.00 Treasury Stock 17,550.00 Paid in Capital from Treasury Stock 900.00 k Retained Earning 959,700.00 Cash 959,700.00 2 Preferred Dividend Preferred Shares Outstanding 170,000.00 Add:Remceived the remaining amount on subscribed 32,000.00 Additional Sahres Issued 15,000.00 Preferred Stock for Building 22,500.00 Preferred Stock Outstanding 239,500.00 Preferred Dividend 718,500.00 Equity Dividend : Common Stock Outstanding 120,000.00 Additional shares issued 27,200.00 For Building 13,600.00 Common Stock Outstanding 160,800.00 Common Dividend 241,200.00 Total Dividends Paid 959,700.00 Contributed Capital: Preferred Stock Outstanding 1,375,300.00 Common Stock Outstanding 2,576,200.00 Additional Paid in Capital-Common Stock 74,300.00 Additional Paid in Capital-Preferred 17,450.00 Total Contributed Capital 4,043,250.00
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