Samson Company had the following transactions. 1. Issued 5,000 shares of $100 pa

Question

Samson Company had the following transactions.

1. Issued 5,000 shares of $100 par preferred stock at $107 for cash.

2. Issued 8,000 share of common stock with a par value of $10 for $120,000.

3. Purchased 500 shares of treasury common stock for $12,000.

Prepare the journal entries to record the above stock transactions.

(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Explanation / Answer

Solution:

Transaction

Account Titles and Explanation

Debit

Credit

1)

Cash A/c Dr.

(5,000*107)

$535,000

     To Preferred Stock (5000*100)

$500,000

     To Paid in Capital – in excess of par value – Preferred Stock

$35,000

(Preferred Stock issued at premium)

2)

Cash A/c Dr.

(8000*15)

$120,000

     To Common Stock (8000*10)

$80,000

     To Paid in Capital – in excess of par value – Common Stock

$40,000

(Common Stock issued at premium)

3)

Treasury Stock A/c Dr.

$12,000

    To Cash A/c

$12,000

(Being common stock re-purchased)

Transaction

Account Titles and Explanation

Debit

Credit

1)

Cash A/c Dr.

(5,000*107)

$535,000

     To Preferred Stock (5000*100)

$500,000

     To Paid in Capital – in excess of par value – Preferred Stock

$35,000

(Preferred Stock issued at premium)

2)

Cash A/c Dr.

(8000*15)

$120,000

     To Common Stock (8000*10)

$80,000

     To Paid in Capital – in excess of par value – Common Stock

$40,000

(Common Stock issued at premium)

3)

Treasury Stock A/c Dr.

$12,000

    To Cash A/c

$12,000

(Being common stock re-purchased)

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