Question

Selected Stock Transactions

A Corporation sells and services pipe welding equipment. The following selected accounts appear in the ledger of the corporation at the beginning of the current year:

Preferred 2% Stock, $100 par (50,000 shares authorized, 25,000 shares issued) $2,500,000

Paid-In Capital in Excess of Par—Preferred Stock 300,000

Common Stock, $15 par (800,000 shares authorized, 260,000 shares issued) 3,900,000

Paid-In Capital in Excess of Par—Common Stock 510,000

Retained Earnings 15,285,000

During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:

1. Purchased 48,000 shares of treasury common for $20 per share.
2. Sold 24,000 shares of treasury common for $23 per share.
3. Issued 13,000 shares of preferred 2% stock at $119.
4. Issued 80,000 shares of common stock at $22, receiving cash.
5. Sold 16,000 shares of treasury common for $18 per share.
6. Declared cash dividends of $2.00 per share on preferred stock and $0.10 per share on common stock.
7. Paid the cash dividends.

Required:

Journalize the entries to record the transactions.

If an amount box does not require an entry, leave it blank.

Answer 1

account titles and explanation debit credit calculation 1 treasury stock $ 960,000 48000*$20 cash $ 960,000 (to record purchase of treasury stock) 2 $ 552,000 cash treasury stock paid in capital-treasury stock (to record sale of treasury stock) $ 480,000 $ 72,000 24000*$23 24000*$20 $552000-$480000 3 $ 1,547,000 cash preferred stock Paid-In Capital in Excess of Par-Preferred Stock (to record issue of preferred stock) $ 1,300,000 $ 247,000 13000*$119 13000*$100 $1547000-$1300000 4 $ 1,760,000 cash common stock Paid-In Capital in Excess of Par-Common Stock (to record issue of common stock) $ 1,200,000 $ 560,000 80000*$22 80000*$15 80000*$7 $ 288,000 $ 32,000 cash paid in capital-treasury stock treasury stock (to record sale of treasury stock) 16000*$18 $320000-$288000 16000*$20 $ 320,000

account titles and explanation debit credit calculation 6 $ 76,000 (25000+13000) *$2 dividends preferred dividends payable (to record declaration of preferred dividends) $ 76,000 6 $ 33,200 (260000-48000+24000+80000+16000) * $0.10 dividends common dividends payable (to record declaration of common dividends) $ 33,200 7 $ 76,000 preferred dividends payable cash (to record payment of preferred dividends) $ 76,000 7 common dividends payable $ 33,200 cash $ 33,200 (to record payment of common dividends)

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