Recording and reporting common and preferred stock transactions
Rainey Inc. was organized on June 5, 2011. It was authorized to issue 400,000 shares of $10 par common stock and 50,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share. The following stock transactions pertain to Rainey Inc.:
1. Issued 20,000 shares of common stock for $15 per share.
2. Issued 10,000 shares of the class A preferred stock for $30 per share.
3. Issued 50,000 shares of common stock for $18 per share.
Required
a. Prepare general journal entries for these transactions.
b. Prepare the stockholders' equity section of the balance sheet immediately after these transactions.
Exercise 11-6A Effect of no-par common and par preferred stock on the horizontal statements model
Eaton Corporation issued 5,000 shares of no-par common stock for $20 per share. Eaton also issued 2,000 shares of $50 par, 6 percent noncumulative preferred stock at $60 per share.
Required
a. Record these events in a horizontal statements model like the following one. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.
Assets = Equity | Rev. - Exp. = Net Inc. Cash Flow |
Cash = Pfd. Stk. + Com. Stk. + PIC in Excess |
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b. Prepare journal entries to record these transactions.
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