Question

Truman Company is authorized to issue 1,000,000 shares of its $5 par value common stock and 500,000 shares of its $10 par value preferred stock. During 2019, the company had the following select transactions.

1. Issued 200,000 shares of common stock for $35 per share
2. Issued 50,000 shares of preferred stock for $55 per share
3. Reacquired 80,000 shares of common stock at $30 per shares
4. Reissued 50,000 shares from treasury for $33 per share
5. Reissued 30,000 shares from treasury for $23 per share

Required:

1. Prepare journal entries OR a financial statements effects template to record the above transactions.
   

Answer 1

Journal entries:

No.	Account title and explanation	Debit	Credit
1	Cash (200,000x$35)	7,000,000
	Common stock (200,000x$5)		1,000,000
	Paid in capital in excess of par-Common stock		6,000,000
2	Cash (50,000x$55)	2,750,000
	Preferred stock (50,000x$10)		500,000
	Paid in capital in excess of par-Preferred stock		2,250,000
3	Treasury stock	2,400,000
	Cash (80,000x$30)		2,400,000
4	Cash (50,000x$33)	1,650,000
	Treasury stock (50,000x$30)		1,500,000
	Paid in capital from treasury stock		150,000
5	Cash (30,000x$23)	690,000
	Paid in capital from treasury stock	210,000
	Treasury stock (30,000x$30)		900,000