Question

A.  Prepare the journal entry required to record the preferred stock issue.

B.  Prepare the journal entries required to record the declaration and payment of the cash dividends.

C.  Prepare the​ stockholders' equity section of the balance sheet at the end of the year.

Tough Side Roofing and Siding Inc. reported the following shareholders' equity section as of the beginning of the current year.

Stockholders' Equity

Contributed Capital:

Common Stock, $4 par value, 2,360,000 authorized and 785,000 shares issued, and 727,500 shares outstanding (a)

Additional Paid-in Capital in Excess of Par - Common (b)

Total Contributed Capital (c)

Retained Earnings (d)

Accumulated Other Comprehensive Income (Loss) (e)

Less: Treasury Stock (57,500 common shares at cost) (f)

Total Stockholders' Equity (g)

(a) $3,140,000

(b) 20,120,000

(c) $23,260,000

(d) 7,658,000

(e) 911,000

(f) (1,840,000)

(g) $29,989,000

Tough Side also issued 829,000 shares of its $8 par value preferred stock. There is a 5% dividend rate on the preferred shares that Tough Side issued at $17 per share. The company paid $230,000 in underwriting fees to issue the shares. It reported $2,675,000 in net income for the year and declared and paid dividends of $1.60 per share on its common shares and 5% of par for the preferred shares. The company has 1,000,000 shares authorized for preferred stock.

Requirement A.

Prepare the journal entry required to record the preferred stock issue. (Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

Account Current Year

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Requirement B.

Prepare the journal entries required to record the declaration and payment of the cash dividends. (Record debits first, then credits. Exclude explanations.)

Account Current Year

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Next, record the entry for the declaration of the common shares dividends.

Account Current Year

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Now we can record the journal entry for the payment of the preferred dividends.

Account Current Year

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Our final journal entry is for the payment of common dividends.

Account Current Year

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Requirement C.

Prepare the stockholders' equity section of the balance sheet at the end of the year. (Enter the accounts in the proper order for the​ stockholders' equity section of the balance​ sheet, listing preferred data before common data. Use parentheses or a minus sign for numbers to be​ subtracted.)

Stockholders Equity

Contributed Capital:		Balance
5% Preferred Stock, $8 par value	$??? shares issued	$???
Additional Pain-in Capital in Excess of Par - Preferred		$???
Common Stock, $? par value	$??? shares authorized
$??? shares issued		$???
Additional Pain-in Capital in Excess of Par - Common		$???
Total Contributed Capital		$???
Retained Earnings		$???
Total Contributed Capital and Retained Earnings		$???
Accumulated Other Comprehensive Income (Loss)		$???
Less: Cost of Treasury Stock		$???
Total Stockholders' Equity		$???

Answer 1