Question

On December 31, 2021, Crane Company had 1,380,000 shares of $7 par common stock issued and outstanding. At December 31, 2021, stockholders' equity had the amounts listed here. Common Stock Additional Paid-in Capital Retained Earnings $9,660,000 1,805,000 1,255,000 Transactions during 2022 and other information related to stockholders' equity accounts were as follows. 1. On January 10, issued at $107 per share 111,000 shares of $100 par value, 7% cumulative preferred stock. 2. On February 8, reacquired 12,800 shares of its common stock for $13 per share. 3. On May 9, declared the yearly cash dividend on preferred stock, payable June 10, to stockholders of record on May 31. 4. On June 8, declared a cash dividend of $1.40 per share on the common stock outstanding, payable on July 10, to stockholders of record on July 1. 5. Net income for 2022 was $3,606,000. Record the journal entries that are required for items 1-5 above. (Record entries in the order displayed in the problem statement. 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 tities and enter o for the amounts.) Date Account Titles and Explanation Debit Credit (To close net income) (To close cash dividends)

Answer 1

Date	Account title and explanation	Debit	Credit
Jan. 10	Cash (111,000x$107)	11,877,000
	Preferred stock (111,000x$100)		11,100,000
	Paid in capital in excess of par value-Preferred stock		777,000
Feb. 8	Treasury stock (12,800x$13)	166,400
	Cash		166,400
May. 9	Cash dividend	777,000
	Dividend payable (11,100,000x7%)		777,000
Jun. 8	Cash dividend	1,914,080
	Dividend payable (1,380,000-12,800)x$1.40		1,914,080
Jun. 10	Dividend payable	777,000
	Cash		777,000
Jul. 10	Dividend payable	1,914,080
	Cash		1,914,080
Dec. 31	Income summary	3,606,000
	Retained earnings		3,606,000
	(To close net income)
Dec. 31	Retained earnings (1,914,080+777,000)	2,691,080
	Cash dividend		2,691,080
	(To close Cash divided)

CRANE COMPANY Partial Balance Sheet December 31, 2022
Stockholders’ equity
Paid-in capital
Capital stock
Preferred stock	11,100,000
Common stock	9,660,000
Total capital stock		20,760,000
Additional paid-in capital
Paid in capital in excess of par value -preferred stock	777,000
Paid in capital in excess of par value -common stock	1,805,000
Total additional paid-in capital		2,582,000
Total paid-in capital		23,342,000
Retained earnings		2,169,920
Total paid-in capital and retained earnings		25,511,920
Less:   Treasury stock		(166,400)
Total stockholders’ equity		$25,345,520

Retained earnings = 1,255,000 + 3,606,000 - 2,691,080 = 2,169,920

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