Question

Shareholders's Equity The Nick Company was formed during 2007. It has 700,00 hares o uring 2 stock, as well as 400,000 shares of $1 par, preferred stock, auit following trans actions occurred related to the Nick Company: uthorized. During 2098, the a. Issued 50,000 shares of preferred stock for $200,000 cash. b. Issued 100,000 shares of common stock for $900,000 cash. c. Nick reacquired 1,000 shares of common and accounts fo reacquired shares using the treasury stock method. Nick sold 800 200 shares held in treasury for stock for $8 per share, d. of the treasury shares for $7 per share, and retired the remaining e. ickdeclared a SI per share cash dividend for both the common and the preferred f. g. shares. Nick pays the cash dividend declared in (e) above. Since all of th Specifically, 00 each e common shares are owned by three individuals in equal amounts, Nick declares a property dividend to these common sharehols Nick has three land holdings of equal size t are worth to these three shareholders. os that have a c presently $130,000 each. Nick will distribute these three land h. Nick formally distributes these land holdings to the three shareholders Vick Company acquired a large tract of land by issuing 20,000 shares of Selling for S10 per share, while the preferred stock was valued at $5 per share. in (g) above. i. The ock and 100,000 shares of preferred stock. The common stock was Ni ck had three appraisers appraise the land and the values ranged from a low 2008. $640,000 to a high of $732,000. Required: Fully account for the above transactions for the Nick Company during

Answer 1

a)	Cash a/c       dr	200000
	TO Share application money		200000
	Share application money a/c     dr	200000
	To Preferred share capital a/c		50000
	To Premium on issue of share capital a/c		150000
b)	Cash a/c       dr	900000
	To Common Stock A/c
	To Additional paid in capital a/c		900000