Problem 3. CORPORATE EQUITY TRANSACTIONS 1. Issued 5,000 shares of no-par common

Question

Problem 3. CORPORATE EQUITY TRANSACTIONS 1. Issued 5,000 shares of no-par common stock. The market price of the stock is $12 per share. 2. Issued 2,000 shares of 5%, S 100 par, cumulative preferred stock for $122 per share. 3. Declared dividends on preferred dividend of 5% per share. 4. Purchased 500 shares of common stock at $14 for treasury 5, Paid preferred dividend declared in #3. 6. Sold 100 shares treasury stock at $20 per share. Instructions: Journalize the transactions for Fortier Company

Explanation / Answer

In the books of fortier company

(Being shares sold and gain realised)

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Date Particulars Dr.($) Cr.($) 1. Cash a/c dr. 50000 To common stock 50000 (Being shares issued at par, Market price $12 per share) 2. Cash a/c dr. 244000 To 5% cumulative preference stock 200000 To share premium 44000 (Being 5% preference shares issued) 3. Securities premium a/c dr. 10000 To preference dividend payable 10000 (Being 5%pref dividend declared) 4. Common stock-treasury a/c dr. 7000 To cash a/c 7000 (Being common stock purchased) 5. Preference dividend payable a/c dr. 10000 To cash 10000 (Being pref dividend paid) 6. Casha/c dr. 2000 To common stock treasury 1400 To gain on sale 600

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