Question

Vaughn Company reported the following amounts in the stockholders' equity section of its December 31, 2019, 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) 92,500 Additional paid-in capital 120,000 Retained earnings 413,000 Total $825,500 During 2020, Vaughn took part in the following transactions concerning stockholders' equity. 1. Paid the annual 2019 $11 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2019. 2. Purchased 1,900 shares of its own outstanding common stock for $40 per share. Vaughn uses the cost method. 3. Reissued 600 treasury shares for land valued at $32,100. 4. Issued 530 shares of preferred stock at $105 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $47 per share. 6. Issued the stock dividend. 7. Declared the annual 2020 $11 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2021.

Answer 1

Journal General
No.	Account Titles and Explanation	Debit	Credit
1	Dividends Payable - Preferred	22,000
	Dividends Payable - Common	37,000
	Cash		59,000
[dividend paid]
2	Treasury stock	76,000
	Cash		76,000
[shares reupurchased]
3	Land	32,100
	Treasury stock		24,000
	Paid-in Capital from Treasury Stock		8,100
[treasury stock reissued]
4	Cash	55,650
	Preferred stock		53,000
	Paid-in Capital in Excess of Par - Preferred Stock		2,650
5	Retained earnings	80,840
	Common Stock Dividend Distributable		8,600
	Paid-in Capital in Excess of Par - Common Stock		72,240
[dividend declared]
6	Common Stock Dividend Distributable	8,600
	Common Stock		8,600
7	Retained earning	65,670
	Dividends Payable - Preferred		27,830
	Dividends Payable - Common		37,840
[dividend declared]
	Vaughn Company
	Stockholders' Equity
	December 31. 2020.
	Capital Stock
	Common Stock	101,100
	Preferred Stock	253,000
	Total Capital Stock	354,100
	Additional Paid-in Capital	82,990
	Total Paid-in Capital	437,090
	Retained Earnings	266,490
	Total Paid-in Capital and Retained Earnings	703,580
	Less: Treasury Stock	52,000
	Total Stockholders' Equity	651,580

Please find below table useful to compute desired results: -

B E F G Particulars Given =11/100 100 Preferred Stock Common Stock Additional Paid-in capital Retained Earnings 10000 2000 =F2*D2 92500 18500 =F3*D3 120000 413000 =SUM(G2:G5) Particulars of Transactions 81 11 9 2 1900 10 3 600 11 4 530 12 5 =10/100 13 6 14 7 11 40 32100 105 15 Credit 16 No. Account Titles and Explanation Dividends Payable - Preferred Dividends Payable - Common Cash Journal General Debit =F2*B8 =F3*C8 =C18+C19 [dividend paid] =B9*C9 Treasury stock Cash =C22 [shares reupurchased] =C10 Land Treasury stock Paid-in Capital from Treasury Stock =B10*C9 27 =C25-D26 [treasury stock reissued]

C =B11*c11 294 30 31 B Cash Preferred stock Paid-in Capital in Excess of Par - Preferred Stock =B11*D2 =C29-D30 =(F3-B9+B10)*B12*D3 =C33-D34 35 37 6 38 39 7 Retained earnings =(F3-B9+B10)*B12*C12 Common Stock Dividend Distributable Paid-in Capital in Excess of Par - Common Stock [dividend declared] Common Stock Dividend Distributable =D34 Common Stock Retained earning =D40+D41 Dividends Payable - Preferred Dividends Payable - Common [dividend declared] =C37 =(F2+B11) *B14 =((F3-B9+B10)+D34/D3)*C14 Vaughn Company Stockholders' Equity December 31, 2020. Capital Stock Common Stock Preferred Stock Total Capital Stock Additional Paid-in Capital Total Paid-in Capital Retained Earnings Total Paid-in Capital and Retained Earnings Less: Treasury Stock Total Stockholders' Equity =G3+D38 =(F2+B11)*D2 =C48+C49 =D27+D31+D35 =C50+C51 =G5-C33-C39 =C52+C53 =C22-D26 =C54-C55

End results would be as follows: -

D E F G Particulars Given 11% 100 5 10,000 92,500 2.000 18,500 Preferred Stock Common Stock Additional Paid-in capital Retained Earnings 200.000 92,500 120,000 413,000 825,500 Particulars of Transactions 8 40 32.100 1 2 3 4 5 6 7 1.900 600 530 10% 105 47 12 13 14 Credit Debit 22.000 37.000 59.000 Journal General 17 No. Account Titles and Explanation 1 Dividends Payable - Preferred Dividends Payable - Common Cash [dividend paid] 2 Treasury stock Cash [shares reupurchased] 3 Land Treasury stock Paid-in Capital from Treasury Stock [treasury stock reissued] 76,000 76,000 32.100 24.000 8.100

D E F G A 4 C 55,650 B Cash Preferred stock Paid-in Capital in Excess of Par - Preferred Stock 53,000 2.650 80.840 8,600 72.240 37 8,600 5 Retained earnings Common Stock Dividend Distributable Paid-in Capital in Excess of Par - Common Stock [dividend declared] 6 Common Stock Dividend Distributable Common Stock Retained earning Dividends Payable - Preferred Dividends Payable - Common [dividend declared] 8.600 65.670 27.830 37.840 Vaughn Company Stockholders' Equity December 31, 2020. Capital Stock Common Stock Preferred Stock Total Capital Stock Additional Paid-in Capital Total Paid-in Capital Retained Earnings Total Paid-in Capital and Retained Earnings Less: Treasury Stock Total Stockholders' Equity 101.100 253,000 354.100 82.990 437,090 266,490 703,580 52.000 651,580