Question

Exercise 15-18 Larkspur Company reported the following amounts in the stockholders' equity section of its December 31, 2019, balance sheet. ASSIGNMENT RESOURCES Ch 15 HW 20/02 Practice Brief Exercise 15--05 Problem 15-01 Exercise 15-18 Accounting Analysis and Principles Problem 15-06 Comparative Analysis Case Preferred stock, 10%, $100 par (10,000 shares authorized, 2,000 shares issued) $200,000 Common stock, $5 par (107,000 shares authorized, 21,400 shares issued) 107,000 Additional paid-in capital 127,000 Retained earnings 491,000 Total $925,000 During 2020, Larkspur took part in the following transactions concerning stockholders' equity. Review Score Review Results by Study Obiective 1. Paid the annual 2019 $10 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 1,800 shares of its own outstanding common stock for $41 per share. Larkspur uses the cost method. 3. Reissued 800 treasury shares for land valued at $33,700. 4. Issued 520 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 $44 per share. 6. Issued the stock dividend. 7. Declared the annual 2020 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2021. Prepare journal entries to record the transactions described above. (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 o for the amounts.) No. Account Titles and Explanation Debit Credit 1.

Answer 1

	Solution:
Date	Account Title & Explanation	Debit ($)	Credit ($)
1)	Dividends Payable - Preferred ( 2000 x 10)	20000
	Dividends Payable - Common Stock ( 21400 x 2)	42800
	Cash		62800
2)	Treasury Stock ( 1800 x $41)	73800
	Cash		73800
3)	Land	33700
	Treasury Stock ( 800 x $41)		32800
	Paid in Capital from Treasury Stock		900
4)	Cash (520 x $105)	54600
	Preferred Stock ( 520 x $100 )		52000
	Paid in Capital in excess of Par - Preferred		2600
5)	Retained Earnings {[(21400-1800+800)*10%] x 44}	89760
	Common Stock Dividend Distributable ( 2040 x 5)		10200
	Paid in Capital in Excess of Par - Common		79560
6)	Common Stock Dividend Distributable	10200
	Common Stock		10200
7)	Retained Earnings	69780
	Dividends Payable - Preferred [(2000+520) x 10]		25200
	Dividends Payable - Common [(20400+2040) x 2)]		44880

Larkspur Company
Stockholders' Equity
Paid in capital:	$
Preferred Stock - $100 par value, 10000 shares authorized,
2520 shares issued & outstanding	252000
Common stock - $5 par value, 107000 shares authorized,
23440 shares issued & 22440 shares outstanding	117200
Additional paid in capital (127000 + 2600 + 79560)	209160
Additional paid in capital - Treasury stock	900
Total paid in capital	579260
Retained Earnings (491000 + 354000)	845000
Less: Treasury stock (1000 x $41)	-41000
Total stockholders' equity	1383260