Question

Whispering Winds Corporation has been authorized to issue 20,000 shares of $100 par value, 10%, preferred stock and 1,066,800 shares of no-par common stock. The corporation assigned a $2.80 stated value to the common stock. At December 31, 2020, the ledger contained the following balances pertaining to stockholders’ equity. Preferred Stock $125,000 Paid-in Capital in Excess of Par—Preferred Stock 19,000 Common Stock 1,066,800 Paid-in Capital in Excess of Stated Value—Common Stock 1,219,200 Treasury Stock (1,120 common shares) 14,560 Paid-in Capital from Treasury Stock 1,680 Retained Earnings 82,000 Accumulated Other Comprehensive Income 64,000 The preferred stock was issued for land having a fair value of $144,000. All common stock issued was for cash. In November, 1,680 shares of common stock were purchased for the treasury at a per share cost of $13. In December, 560 shares of treasury stock were sold for $16 per share. No dividends were declared in 2020.

(a) Prepare the journal entries for the: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) Issuance of preferred stock for land. (2) Issuance of common stock for cash. (3) Purchase of common treasury stock for cash. (4) Sale of treasury stock for cash.

b. Prepare the stockholders equity section at December 31, 2020

Answer 1

Answer :-

a)

(1) For issuance of preferred stock for cash
	Debit	Credit
Cash A/c	$            144,000
Preferred Stock A/c		$       125,000
Paid-in Capital in excess of Par Value - Preferred Stock A/c		$         19,000
(2) For issuance of common stock for cash
Cash A/c	$        2,286,000
Common Stock A/c		$      1,066,800
Paid-in Capital in excess of Par Value - Common Stock A\c		$      1,219,200
(3) For Purchase of Common Treasury Stock for cash
Treasury Stock A/c	$           14,560
Cash A/c		$        14,560

b)

STOCK Holders' Equity:
Preferred stock				$ 125,000
Common Stock				$ 1,066,800
						$ 1,191,800
Paid-in Capital in Excess of Par Value-Preferred Stock	$ 19,000
Paid-in Capital in Excess of Stated Value-Common Stock	$1,219,200
						$1,238,200
Total paid in capital					$2,430,000
Retained Earnings					$ 82,000
						$ 2,512,000
Acumulated oyher comprehensive income					$ 64,000
Less:
Treasury stock						($14,560)
Total Stockholder's Equity						$2,561,440