(15 points) II) The stockholders\' equity section of El Giheny Corporation\'s ba
ID: 2597347 • Letter: #
Question
(15 points) II) The stockholders' equity section of El Giheny Corporation's balance sheet on December 31, 2002, appears as follows: Contributed Capital: Common Stock, 600,000 shares authorized 400,000 shares issued and outstanding Paid-in Capital in Excess of Par Value, Common Total Contributed Capital Retained Earnings Total Stockholders' Equity $ 1, 600,000 1.200,000 $ 2, 800,000 200,000 $7,000,000 1) Prepare the journal assuming the following transactions a) Issued 11,000 Shares of $120 par value, 8 percent cumulative b) Issued 39,000 shares of common stock in connection with the c) Declared and issued a 2 percent common stock dividend. The d) Purchased 10,000 shares of common stock for the treasury at a e) Earned net income of $ 450,000 occurred in sequence during 2003 preferred stock at par after obtaining authorization from the state. conversion of bonds having a carrying value of $600,000 market value on the date of declaration was $ 14 per share. cost of $16 per share. Declared at the end of the year. and paid the full year's dividend on preferred stock and a dividend of $0.40 per share on common stock outstandingExplanation / Answer
Date Account titles Debit Credit a) Cash (11000*120) 1320000 8% cumulative preferred stock 1320000 (Issue of preferred atock) b) Bond 600000 Common stock (39000*4) 156000 paid-in-capital in excess of par value-common 444000 (Conversion of bond to common stock) c) Retained earnings (400000+39000)*2%*14 122920 Common stock (400000+39000)*2%*4 35120 paid-in-capital in excess of par value-common 87800 (Declared and issued common stock dividend) d) Treasury stock (10000*16) 160000 Cash 160000 (Purchased common stock for treasury) e) No entry f) Preferred dividend (1320000*8%) 105600 Common dividend (400000+39000-10000)*0.40 171600 Cash 277200 (Declared and paid cash dividend) Par value of common stock=1600000/400000=$4 per share
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