prepare entries for stock transactions, and prepare a stockholders\' equity sect

ID: 2475517 • Letter: P

Question

prepare entries for stock transactions, and prepare a stockholders' equity section. Hartwell Corporation has been authorized to issue 25000 shares of $100 par value, 8%, noncumulative preferred stock and 1000000 shares of no-par common stock. The corporation assigned a $4 stated value to the common stock. At December 31, 2014, the ledger contained the following balances pertaining to stockholders' equity. Preferred Stock $400000 Paid-in Capital in Excess of Par Value-Preferred Stock 5200 Common Stock 2400000 Paid-in Capital in Excess of Stated value- Common stock 660000 Treasury Stock (40000 common shares) 680000 Retained Earnings 3630000 The preferred stock was issued for $452000 cash. All common stock issued was for cash. In November 40000 shares of common stock were purchased for the treasury at a per share cost of $17. No dividends were declared in 2014 Prepare the journal entries for the following Issuance of preferred stock for cash. Issuance of common stock for cash Purchase of common treasury stock for cash Prepare the stockholders equity section of the balance sheet at December 31, 2014.

Explanation / Answer

Issue of common stock

Cash a/c Dr. 9000000

To Common stock 2400000

To Excess of stated value -Common stock 6600000

Issue of prefered stock

Cash a/c Dr 452000

To prefered stock 400000

To paid in excess of par - prefered stock 52000

Treasury stock purchase

Treasury stock a/c Dr 680000

To cash a/c680000

Retained earning

3630000

Common stock

2400000

Prefered stock

400000

Paid in excess of stated value -common stock

6600000

Paid in excess of stated value -prefered stock

52000

Treasury stock purchased

-680000

Retained earning as on 31 dec 2015

12402000