Question

forever young has two classes of stock authorized: 100$ par preferred and 1$ par common.

Problem #1 Forever Young has two classes of stock authorized: $100 par preferred and $1 par common. As of the beginning of the year, 5,000 shares of common stock and no preferred shares have been issued. The following transactions affect stockholders' equity during the year Issue 1,000 additional shares of common stock for $30 per share. Issue 1,000 shares of preferred stock for $105 per share. Declare a cash dividend of $5 per share on preferred stock and $1.25 per share on common stock to all stockholders of record on July 15. Pay the cash dividend declared on July 1. Purchase 500 shares of treasury stock for $28 per share. Issue 200 shares of the treasury stock purchased on October 10 for $26 per share. January 10 March 1 July 1 July 31 October 10 November 1 Forever Young has the following beginning balances in its stockholders' equity accounts: Preferred stock, $0; common stock, $5,000; additional paid-in capital, S20,000; and retained earnings, $10,000. Required: 1. Record each of these transactions. 2. Indicate whether each of these transactions increases (+), decreases (-), or has no effect (NE), on total assets, total liabilities, and total stockholders' equity. Jan 10 Carsh Common stouk Adlitional padin Capital March 30,000 29000 1/000 Cash Common Stee Additonal Paidin cupital 105,000 100/000 Si000 ieal Piudend payable 6250 G250

Answer 1

Problem #1

1.

Date	General Journal	Debit	Credit
Jan. 10	Cash (1000 x $30)	30000
	Common stock (1000 x $1)		1000
	Additional paid-in capital		29000
	(To record issue of common stock)
Mar. 1	Cash (1000 x $105)	105000
	Preferred stock (1000 x $100)		100000
	Additional paid-in capital		5000
	(To record issue of preferred stock)
Jul. 1	Dividends*	12500
	Dividends payable		12500
	(To record declaration of cash dividends)
Jul. 31	Dividends payable	12500
	Cash		12500
	(To record payment of dividends declared)
Oct. 10	Treasury stock (500 x $28)	14000
	Cash		14000
	(To record purchase of treasury stock)
Nov. 1	Cash (200 x $26)	5200
	Retained earnings	400
	Treasury stock (200 x $28)		5600
	(To record sale of treasury stock)

*Dividends = (1000 x $5) + [(5000 + 1000) x $1.25] = $5000 + $7500 = $12500

2.

Date	Assets	Liabilities	Equity
Jan. 10	+	NE	+
Mar. 1	+	NE	+
Jul. 1	NE	+	-
Jul. 31	-	-	NE
Oct. 10	-	NE	-
Nov. 1	+	NE	+

Per HOMEWORKLIB RULES the first question has been answered. Please post Problem #2 separately. Also, no net income has been provided for Problem #2.