Sarasota Corp. has been authorized to issue 20,400 shares of $100 par value, 6%,

Question

Sarasota Corp. has been authorized to issue 20,400 shares of $100 par value, 6%, noncumulative preferred stock and 1,140,000 shares of no-par common stock. The corporation assigned a $4 stated value to the common stock. At December 31, 2017, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $154,000 Paid-in Capital in Excess of Par Value—Preferred Stock 21,400 Common Stock 1,980,000 Paid-in Capital in Excess of Stated Value—Common Stock 1,550,000 Treasury Stock (4,400 common shares) 35,200 Retained Earnings 82,600 Accumulated Other Comprehensive Income 49,400 The preferred stock was issued for $175,400 cash. All common stock issued was for cash. In November 4,400 shares of common stock were purchased for the treasury at a per share cost of $8. No dividends were declared in 2017. Prepare the journal entries for the following. (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 0 for the amounts.) (1) Issuance of preferred stock for cash. (2) Issuance of common stock for cash. (3) Purchase of common treasury stock for cash. No. Account Titles and Explanation Debit Credit 1. enter an account title to record the first transaction enter a debit amount enter a credit amount enter an account title to record the first transaction enter a debit amount enter a credit amount enter an account title to record the first transaction enter a debit amount enter a credit amount 2. enter an account title to record the second transaction enter a debit amount enter a credit amount enter an account title to record the second transaction enter a debit amount enter a credit amount enter an account title to record the second transaction enter a debit amount enter a credit amount 3. enter an account title to record the third transaction enter a debit amount enter a credit amount enter an account title to record the third transaction enter a debit amount enter a credit amount Prepare the stockholders’ equity section of the balance sheet at December 31, 2017.

Explanation / Answer

Journal entry Accounting titles & Explanations Debit Credit 1) Cash 175,400 Preferred stock 154,000 Paid in capital In excess of par value -PS 21,400 2) Cash 3,530,000 common stock 1,980,000 Paid in capital in excess of par value-CS 1,550,000 3) Treasury stock 35,200 Cash 35,200

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