Recording and reporting treasury stock transactions
Midwest Corp. completed the following transactions in 2012, the first year of operation.
1.Issued 20,000 shares of $10 par common stock at par.
2.Issued 2,000 shares of $30 stated value preferred stock at $32 per share.
3.Purchased 500 shares of common stock as treasury stock for $15 per share.
4.Declared a 5 percent dividend on preferred stock.
5.Sold 300 shares of treasury stock for $18 per share.
6.Paid the cash dividend on preferred stock that was declared in Event 4.
7.Earned cash service revenue of $75,000 and incurred cash operating expenses of $42,000.
8.Appropriated $6,000 of retained earnings.
Required
a.Organize the transaction in accounts under an accounting equation.
b. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2012.
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