Question

National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders' equity during 2021, National League's first year of operations: February 2 Issue 1.4 million shares of common stock for $16 per share. February 4 Issue 410,000 shares of preferred stock for $23 per share. June 15 Purchase 140,000 shares of its own common stock for $11 per share. August 15 Resell 105,800 shares of treasury stock for $26 per share. November 1 Declare a cash dividend on its common stock of $1.40 per share and a $328,000 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.) November 30 Pay the dividends declared on November 1. Required: 1. Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Credit Accounts tittle Debit (1400000*$ 16) 7,000,000 (1400000 $ 5) 15,400,000 (1400000*$ 23) Cash $22,400,000 Common stock Additional paid in capital-Common stock Cash (410000*$ 23) 8,200,000 (410000*S 20) 1,230,000 (410000*$ (23-20) 9,430,000 Preffered stock $ Additional paid in capital-Preferred stock Treasury stock Cash (140000*$ 11) 1,540,000 1,540,000 Cash (105000*$ 26) 1,155,000 (105000 * 11) 1,575,000 (105000* (26-11) 2,730,000 Treasury stock Additional paid in capital-Treasury stock $ Dividends Dividends payable -Common Stock Dividends payable -Preferred Stock 2,239,000 1,911,000 (1400000-140000+105000)*1.4 $ 328,000 Dividends payable -Common Stock Dividends payable -Preferred Stock Cash 1,911,000 328,000 2,239,000 National league gear Balance sheet (Stockholder's equity section) December 31, 2021 Paid in capital Common stock Preferred stock Additional paid in capital-Commo stock Additional paid in capital-Preferred stock 1,230,000 Additional paid in capital-Treasury stock Total Paid in capital $ 7,000,000 $ 8,200,000 $15,400,000 $1,575,000 33,405,000 A $ Retained earnings Net Income Less: Dividends 4710000 (2,239,000) $ 2,471,000 B 35,876,000A+B Total Less: Treasury stock $ 1,190,000 Total stockholder's equity 37,066,000