Question

8% Preferred Stock, $100 par value, cumulative, 50,000 shares authorized 30,000 shares issued and outstanding 3,000,000 In excess of par on preferred stock $ 300,000 Total Paid-in-Capital from Preferred Stock $ 3,300,000 Common Stock, no par, $25 stated value, 1,000,000 shares authorized. 400,000 shares issued and outstanding $ 10,000,000 In excess of stated value on common stock $ 600,000 Total Paid-in-Capital from Common Stock $ 10,600,000 Total Paid-in-Capital $ 13,900,000 Retained Earnings (Note A) $ 4,100,000 Total Stockholder's Equity $ 18.000.000 Note A: Preferred stock dividends are in arrears for 2018 and 2019. On the following journal pages, prepare the appropriate journal entries, if any, for the following transactions in 2020. If an entry is not required write the date and “none" in the journal. 1/25 Issue 60,000 shares of common stock for $40 per share. 2/18 The Board of Directors declared a cash dividend on preferred and common stock totaling $750,000 payable on March 15, to stockholders of record on February 28 (Record dividends on preferred and common stock in separate accounts. - Check retained earnings Note A) 2/28 Date of record for cash dividends on preferred and common stock. 3/15 Paid the 2/18 cash dividend. 5/20 Declared a 10% stock dividend, distributable on June 15, to stockholders of record on May 31. The market value of Russell Corporation's common stock was $45 per share. 5/31 Date of record for stock dividend on common stock. 6/15 Distributed stock dividend to common stockholders. 7/10 Purchased 50,000 shares of Russell Corporation's common stock for $43 per share. 8/13 Sold 12,000 shares of Treasury Stock for $45 per share. 11/12 Sold 20,000 shares of Treasury Stock for $25 per share. DF

Answer 1

Solution:

Transaction	General Journal	Debit	Credit
1/25	Cash	$                2,400,000
	Common Stock		$           1,500,000
	Paid in capital, in excess of stated value		$               900,000
	(To record Common Stock Issued)
2/18	Cash Dividend	$                    750,000
	Dividend Payable-Preferred Stock [30000*100*8%*3Years]		$               720,000
	Dividend Payable-Common Stock [750000-720000]		$                 30,000
	( To record declaration of dividend)
2/28	None	$                               -
3/15	Dividend Payable-Preferred Stock	$                    720,000
	Dividend Payable-Common Stock	$                      30,000
	Cash		$               750,000
	(To record payments of dividends)
5/20	Retained Earnings	$                1,800,000
	Common Stock Dividend Distributable		$           1,000,000
	Paid-In-Capital Excess of Stated		$               800,000
	( To record declaration of stock dividend)
5/31	None	$                               -
6/15	Common Stock Dividend Distributable	$                1,000,000
	Common Stock		$           1,000,000
	( To record distribution of common stock)
7/10	Treasury Stock	$                2,150,000
	Cash		$           2,150,000
	(To record Treasury Stock purchased)
8/13	Cash	$                    540,000
	Treasury Stock		$               516,000
	Add Paid-In Cap - Treasury Stock		$                 24,000
	(To record treasury stock resold)
11/12	Cash	$                    500,000
	Add Paid-In Cap - Treasury Stock	$                      24,000
	Retained Earnings	$                    336,000
	Treasury Stock		$               860,000
	(To record treasury stock resold)