Question

The stockholders’ equity accounts of Crane Company on January 1, 2022, were as follows.

Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized)		$350,000
Common Stock ($10 stated value, 800,000 shares authorized)		1,400,000
Paid-in Capital in Excess of Par Value—Preferred Stock		50,000
Paid-in Capital in Excess of Stated Value —Common Stock		800,000
Retained Earnings		740,000
Treasury Stock (7,000 common shares)		56,000

During 2022, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Mar	1		Issued 6,000 shares of common stock for $80 per share.
June	22		Purchased 1,000 additional shares of common treasury stock at $11 per share.
Sept.	1		Declared a 8% cash dividend on preferred stock, payable October 1.
Oct.	1		Paid the dividend declared on September 1.
Dec.	1		Declared a $0.60 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022.
	31		Determined that net income for the year was $110,000. Paid the dividend declared on December 1.

Journalize the transactions for the dates shown. Include entries to close net income and dividends to Retained Earnings.(Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Date	Accounts titles and explanations	Debit	Credit
Mar 1	Cash (6000*$80)	$480000
	Common stock (6000*$10)		$60000
	Paid-in-capital in excess of Stated value- Common stock (480000-60000)		$420000
	(To record common stock issued)
June 22	Treasury stock (1000*$11)	$11000
	Cash		$11000
	(To record treasury stock purchased)
Sep 1	Cash dividends ($350000*8%)	$28000
	Dividends payable- Preferred stock		$28000
	(To record preferred dividend declared)
Oct 1	Dividend payable- Preferred	$28000
	Cash		$28000
	(To record preferred dividend paid)
Dec 1	Cash dividend	$87000
	Dividends payable- Common stock		$87000
	(To record dividend declared on common stock)
Dec 31	Income summary	$110000
	Retained earnings		$110000
	(To close net income)
Dec 31	Retained earnings	$115000
	Cash dividend (28000+87000)		$115000
	(To close dividends)
Dec 31	Dividends payable- Common stock	$87000
	Cash		$87000
	(To record cash dividend paid on common stock)

Calculation of Common stock cash dividend

Common stock cash dividend= $(1400000/10+6000-1000)*$0.60= $87000