Question

On January 1, 2018, Windsor Corporation was authorized to issue 400,000 shares of common stock, par value $12 per share, and 80,000 shares of 5 percent cumulative preferred stock, par value $25 per share. The preferred dividends are 2 years in arrears. Prepare Journal Entries to record the following 2018 transactions: 1. Windsor Corporation was granted a charter authorizing the issuance of 400,000 shares of common stock. 2. Issued 80,000 shares of common stock at $19 per share. 3. Issued 30,000 shares of preferred stock at $37 per share. 4. Reacquired 12,000 shares of common stock at $13 per share. 5. Reissued 2,400 of the treasury shares for $26,400. 6. Reissued 1,800 of the treasury shares for $28,800.

Answer 1

account titles and explanation debit credit calculation no entry required $ 1,520,000 cash common stock additional paid in capital-common stock (to record issue of common stock) $ 960,000 $ 560,000 80000*$19 80000*$12 80000*$7 $1,110,000 cash preferred stock additional paid in capital-preferred stock (to record issue of preferred stock) $750,000 $360,000 30000*$37 30000*$25 30000*$12 $ 156,000 12000*$13 treasury stock cash (to record purchase of treasury stock) $ 156,000 5 $ 26,400 $ 4,800 cash retained earnings treasury stock (to record sale of treasury stock) $31,200 - $26,400 2400*$13 $ 31,200

account titles and explanation debit credit calculation $ 28,800 cash treasury stock paid in capital from treasury stock (to record sale of treasury stock) $ 23,400 $5,400 1800*$13 $28,800 - $23,400 7 1600*$8 cash paid in capital from treasury stock retained earnings treasury stock (to record sale of treasury stock) $ 12,800 $5,400 $ 2,600 $20,800 - $12,800 - $5,400 1600*$13 $ 20,800 $ 134,640 dividends preferred dividends payable common dividends payable (to record declaration of dividends) $ 112,500 $ 22,140 30000 * $25 * 5%*3 $134,640 - $112,500

common shares outstanding = 80000-12000+2400+1800+1600 = 73,800 dividend received by each common shareholder = $22,140 / 73,800 = $0.30 10 balance in treasury stock at december 31, 2018 = $156,000 - $31,200 - $23,400 - $20800 = $80,600

In case you have any query, kindly ask in comments.