Homework Answers
| Solution: | |||||
| Journal Entries | |||||
| Sr. No. | Transaction | Account Title and explanation | Debit | Credit | |
| 1 | A | Treasurry stock (87,500 X $ 8) | $7,00,000 | ||
| Cash | $7,00,000 | ||||
| (To Record the purchase of treasurry Stock) | |||||
| 2 | B | Cash (55,000 Shares X $ 11) | $6,05,000 | ||
| Treasurry Stock (55,000 Shares X $ 8) | $4,40,000 | ||||
| Paid in Capital in excess of Par - Treasurry Stock | $1,65,000 | ||||
| (To record the resold of treasury stock) | |||||
| 3 | C | Cash (20,000 Shares X $ 84) | $16,80,000 | ||
| Preferred Stock (20,000 Shares X $ 80) | $16,00,000 | ||||
| Paid in capital in excess of Par - Preferred Stock | $80,000 | ||||
| (To Record the issue of preferred shares) | |||||
| 4 | D | Cash (400,000 Shares X $ 13) | $52,00,000 | ||
| Preferred Stock (400,000 Shares X $ 9) | $36,00,000 | ||||
| Paid in capital in excess of Par - Common Stock | $16,00,000 | ||||
| (To Record the issue of Common shares) | |||||
| 5 | E | Cash (18,000 Shares X $ 7.50) | $1,35,000 | ||
| Paid in Capital in excess of Par - Treasurry Stock(18000 X $ 0.5) | $9,000 | ||||
| Treasurry Stock (18,000 Shares X $ 9) | $1,62,000 | ||||
| (To record the resold of treasury stock) | |||||
| 6 | F | Retained Earnings | $2,34,775 | ||
| Dividend Payable | $2,34,775 | ||||
| (To Record the dividend payable) | |||||
| 7 | G | Dividend Payable | $2,34,775 | ||
| Cash | $2,34,775 | ||||
| (To Record the dividend payment) | |||||
| Working Notes: | |||||
| Caclulation of Common Shares outstading and amount of Dividend paid | |||||
| Common Stock Outstanding at Beginning of the year | 17,50,000 | ||||
| Less: Purchase of Treasury Stock | 87,500 | ||||
| Add: Treasury Stock Resold(55,000 + 18,000) | 73,000 | ||||
| Add: Common stock issued | 4,00,000 | ||||
| Common Stock Outstanding | 21,35,500 | ||||
| Dividend Declares Per shares = | $ 0.05 | ||||
| Common Stock dividend | $1,06,775 | ||||
| Caclulation of Preferred Stock outstading and amount of Dividend paid | |||||
| Prefrred Stock Outstanding at Beginning of the year | 60,000 | ||||
| Add: Preferred stock issued | 20,000 | ||||
| Preferred Stock Outstanding | 80,000 | ||||
| Dividend Declares Per shares = | $ 1.60 | ||||
|
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