Question

Howard Inc. reports the following transactions relating to its stock accounts.

Jan 1    Issued 40,000 shares of $8 par value common stock at $20 each per share.

Mar 5    Issued 8,000 shares of $35 par value, 6% preferred stock at $50 cash per share.

June 15 Purchased 7,000 shares of its own common stock at $18 cash per share.

Aug 4   Sold 6,500 shares of the treasury stock at $28 cash per share.

Sep 15      Declared a 5% common stock dividend when the market price of its $8 par value common stock was $20 per share. Patrick Inc. has 395,000 shares of stock outstanding.

Dec 31     Declared and paid a quarterly cash dividend of $124,000

1) Please provide the journal entries for each of the transactions above.

2) Please calculate the amount and indicate whether on the Debit or Credit side for the "Cash" Account and "Additional Paid-in Capital" Account.

Answer 1

1)

Date	Account Titles	Debit	Credit
Jan. 1	Cash	$      800,000
	Common Stock		$      320,000
	Paid in Capital in excess of par-common		$      480,000
Mar. 5	Cash	$      400,000
	Preferred Stock		$      280,000
	Paid in Capital in excess of par-preferred		$      120,000
Jun. 15	Treasury Stock	$      126,000
	Cash		$      126,000
Aug. 6	Cash	$      182,000
	Treasury Stock		$      117,000
	Paid in Capital from Treasury Stock		$         65,000
Sep. 15	Retained Earnings	$         39,500
	Stock Dividend Distributable		$         15,800
	Paid in Capital in excess of par-common		$         23,700
Dec. 31	Retained Earnings	$      124,000
	Cash		$      124,000

For Sep 15, Outstanding common stock = 40000-500 = 39500

2)
Cash Account - Debit = $1,132,000
Additional Paid in Capital - Credit = $688,700