Question

Brief Exercise 10-5 Record issuance of preferred stock (LO10-3) Equinox Outdoor Wear issues 1,000 shares of its $0.01 par value preferred stock for cash at $23 per share Record the issuance of the preferred shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the issuance of preferred stock. Note: Enter debits before credits General Journal Clear entry View general journal

Answer 1

Ans.1
	Transaction	General Jouranl	Debit	Credit
	1	Cash (1000*23)	23000
		Preferred stock (1000*0.01)		10
		Additional Paid-in capital [1000*(23-0.01)]		22990
Ans.2		Preferred dividends for 2018	3000
		Preferred dividends in arrears for 2016 and 2017	6000
		Remaining dividends to common stockholders	1000
		Total dividends	10000
		*The dividend will be same in each year
		*Dividends   =   1000 * 50 *6%	3000
		2016                 =           3000
		2017                 =           3000
		2018                 =           3000
		Arrears preferred dividends (for 2016+2017)     =	3000 + 3000
			6000
		Remaining dividends to common stockholders   =   Total Dividends - (Preferred dividends for 2018 + 2016 + 2017)
				10000 - (3000+3000+3000)
				1000