Nicole has been financing Nicole’s Getaway Spa (NGS) using equity financing. Cur

Question

Nicole has been financing Nicole’s Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no-par preferred shares and 200,000 $2 par common shares. Outstanding shares include 54,000 preferred shares and 44,000 common shares.

On November 12, the board of directors declares a $0.50 cash dividend on each outstanding preferred share.

The dividend is paid December 20.

Prepare the journal entries needed for each of the transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Record the issuance of 1,200 shares of preferred stock with no par value for a price of $11 per share.

b. Record the purchase of 1,200 previously issued common shares for a price of $10 per share.

c. Record the declaration of a $0.50 cash dividend on the shares of preferred stock outstanding.

d. Record the payment of the cash dividend to the preferred shareholders.

Recently the following transactions have taken place. 3. Show the overall effect of each transaction on the assets, liabilities, and shareholders' equity of the company. (Use + for increase,-for decrease.) (Leave cell blank if there is no effect.) Balance Sheet Transaction Stockholders Equity Assets Liabilities a. b. C. d.

Explanation / Answer

(1) Journal Entries

(2) Effect of each transaction on the Assets, Liabilities and Shareholders' Equity of the company

S.No. Particulars Debit ($) Credit ($) (a) Cash 13,200 To Preferred Stock 13,200 (Being preferred stock 1,200 shares issued for $11 per share) (b) Common Stock 2,400 Reserves & Surplus 9,600 To Cash 12,000 (Being 1,200 shares of Common Stock purchased by company for $10 per share) (c) No Entry (d) Reserves & Surplus 600 To Cash 600 (Being dividend paid to Preferred Shareholders $0.50 per share on 1,200 shares)

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.