Recording and reporting treasury stock transactions
Midwest Corp. completed the following transactions in 2011, 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 cash 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 revenue of $75,000 and incurred operating expenses of $42,000.
8. Closed revenue, expense, and dividend accounts to the retained earnings account.
9. Appropriated $6,000 of retained earnings
Required
a. Prepare journal entries to record these transactions and post them to T-accounts.
b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2011.
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