Sheffield Company reported the following amounts in the stockholders equity sect

Question

Sheffield Company reported the following amounts in the stockholders equity section of its December 31, 2016, balance sheet. Preferred stock, 11%, 100 par (10,000 shares authorized, 2,000 shares issued) $200,000 Common stock, $5 par (92,500 shares authorized, 18,500 shares issued) Additional paid-in capital Retained earnings 92.500 120,000 413.00O 5825,500 Total During 2017, Sheffield took part in the following transactions concerning stockholders equity. 1. Paid the annual 2016 $11 per share dividend on preferred stock and a$2 per share dividend on common stock. These dividends had been declared on December 31, 2016 2. Purchased 1,900 shares of its own outstanding common stock for $40 per share. Sheffield uses the cost method 3. Reissued 600 treasury shares for land valued at $32,100 4. Issued 530 shares or preferred stock at 105 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for 547 per share 6. Issued the stock dividend. 7. Declared the annual 2017 $11 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018. Prepare journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit 2. 3. 4. 5. 6.

Explanation / Answer

Answer:

Journal Entries

Number

Description

Debit $

Credit $

1

Dividends Payable—Preferred (2,000 X $11)

22000

Dividends Payable—Common (18500 X $2)

37000

To cash

59000

2

Treasury Stock

76000

To Cash (1,900 X $40)

76000

3

Land

32100

To Treasury Stock (600 X $40)

24000

To Paid-in Capital From Treasury Stock

8100

4

Cash (530 X $105)

55650

Preferred Stock (530 X $100)

53000

Paid-in Capital in Excess of Par—Preferred

2650

5

Retained Earnings (1720* X $47)

80840

Common Stock Dividend Distributable-
(1,720 X $5

8600

Paid-in Capital in Excess of Par- Common

72240

*(18,500 – 1,900 +600 = 17200;
17200 X 10%=1720)

6

Common Stock Dividend Distributable

8600

Common Stock

8600

7

Retained Earnings

64410

Dividends Payable—Preferred
(2,530 X $11)

27830

Dividends Payable—Common
(18290* X $2)

36580

*(17200 + 1,720)

Number

Description

Debit $

Credit $

1

Dividends Payable—Preferred (2,000 X $11)

22000

Dividends Payable—Common (18500 X $2)

37000

To cash

59000

2

Treasury Stock

76000

To Cash (1,900 X $40)

76000

3

Land

32100

To Treasury Stock (600 X $40)

24000

To Paid-in Capital From Treasury Stock

8100

4

Cash (530 X $105)

55650

Preferred Stock (530 X $100)

53000

Paid-in Capital in Excess of Par—Preferred

2650

5

Retained Earnings (1720* X $47)

80840

Common Stock Dividend Distributable-
(1,720 X $5

8600

Paid-in Capital in Excess of Par- Common

72240

*(18,500 – 1,900 +600 = 17200;
17200 X 10%=1720)

6

Common Stock Dividend Distributable

8600

Common Stock

8600

7

Retained Earnings

64410

Dividends Payable—Preferred
(2,530 X $11)

27830

Dividends Payable—Common
(18290* X $2)

36580

*(17200 + 1,720)

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