jw company was formed in 2014. His charter authorized the issuance of 500,000 sh
ID: 2482981 • Letter: J
Question
jw company was formed in 2014. His charter authorized the issuance of 500,000 shares of common stock, par value $5 per share, and 10,000 shares of 8% preffered stock par value $25 per share. The following transactions took place during 2014.
Jan 1: Sold and issued 25,000 shares of common sotck for cash at $25 per share
Feb 1: Sold and issued 5,000 shares of preferred stock for cash at $75 per share.
June 1: Repurchased 7500 shares of common stock at $25 per share
Aug 1: Sold 1000 shares of the Treasury stock at $26 per share
Oct 1: Sold another 1500 shares of Treasury stock at $23 per share
Dec 1: Declared cash dividend totaling $100,000
Dec 31: Paid the cash dividend that were declared
A) Prepare journal entry for each of the following transactions
B) Compute the number of shares of common stock issued and outstanding at Dec 31, 2014
Explanation / Answer
A. Journal entries:
B. Number of shares of common stock issued and outstanding at Dec 31, 2014 = 25,000 issued - 7,500 repurchased + 1,000 reissued + 1,500 reissued = 20,000
Date Account Titles Debit Credit 2014 $ $ Jan 1 Cash 625,000 Common stock 125,000 Additional paid-in capital- Common stock 500,000 Feb 1 Cash 375,000 Preferred stock 125,000 Additional paid-in capital - Preferred stock 250,000 June 1 Treasury stock 187,500 Cash 187,500 August 1 Cash 26,000 Treasury stock 25,000 Additional paid-in capital - Treasury stock 1,000 October 1 Cash 34,500 Retained earnings 2,000 Additional paid-in capital- Treasury stock 1,000 Treasury stock 37,500 December 1 Retained earnings 100,000 Dividends payable- Preferred stock 10,000 Dividends payable - Common stock 90,000 December 31 Dividends payable - Preferred stock 10,000 Dividends payable-Common stock 90,000 Cash 100,000Related Questions
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