Question

Required information The following information applies to the questions displayed below.] Major League Apparel has two classes of stock authorized: 4%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2021, its first year of operations January 2 Issue 120,000 shares of common stock for $50 per share. February 14 Issue 40,000 shares of preferred stock for $13 per share. May 8 Purchase 12,000 shares of its own common stock for $40 per share. May 31 Resell 6,000 shares of treasury stock for $45 per share. 1 Declare a cash dividend on its common stock of $0.25 per share and a $16,000 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.) December 30 Pay the cash dividends declared on December 1.

Answer 1

		Debit	Credit
January 02,2021	Cash	6000000		=120000*50
	Common stock		120000	=120000*1
	Additional paid-in capital		5880000
February 14,2021	Cash	520000		=40000*13
	Preferred stock		400000	=40000*10
	Additional paid-in capital		120000
May 08,2021	Treasury stock	480000		=12000*40
	Cash		480000
May 31,2021	Cash	270000		=6000*45
	Treasury stock		240000	=6000*40
	Additional paid-in capital		30000
December 01,2021	Dividends	44500		=16000+(120000-12000+6000)*0.25
	Dividends payable		44500
December 15,2021	No journal entry required
December 30,2021	Dividends payable	44500
	Cash		44500