Selected Stock Transactions During the year, the corporation completed a number

Question

Selected Stock Transactions

During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:

Purchased 87,500 shares of treasury common for $8 per share.

Sold 55,000 shares of treasury common for $11 per share.

Issued 20,000 shares of preferred 2% stock at $84.

Issued 400,000 shares of common stock at $13, receiving cash.

Sold 18,000 shares of treasury common for $7.50 per share.

Declared cash dividends of $1.60 per share on preferred stock and $0.05 per share on common stock.

Paid the cash dividends.

Journalize the entries to record the transactions.

Explanation / Answer

[1750000-87500+55000+400000+18000=2135500 common shares otstanding

Date Title Debit credit 1 Treasury stock 700,000 cash   (87500*8) 700,000 [being stock repurchased ] 2 Cash   (55000*11) 605000 Additional paid in capital -Treasury stock [11-8]*55000 165000 Treasury stock   (55000 * 8) 440000 [being repurchased shares sold] 3 cash   (20000* 84) 1680000 Preferred stock   (20000*80) 1600000 Additional paid in capital -Preferred stock [20000*(84-80)] 80000 [Being preferred stock issued] 4 cash (400000*13) 5200000 Common stock   (400000*9) 3600000 Additional paid in capital -Common stock [400000*(13-9)] 1600000 Being common stock issued 5 cash   (18000*7.5) 135000 Additional paid in capital -Treasury stock (18000*.5) 9000 Treasury stock    (18000*8) 144000 [being treasury stock sold] 6 Retained dividend 234775 Preferred dividend payable [4800000+1600000]*.02 128000 common stock dividend payable [2135500*.05] 106775 7 Preferred dividend payable 128000 common stock dividend payable 106775 cash 234775 [being dividend paid]

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