Question

Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2018, 150 shares of preferred stock and 1,600 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2018:

  

March 1 Issue 1,600 additional shares of common stock for $19 per share.

April 1 Issue 150 additional shares of preferred stock for $26 per share.

June 1 Declare a cash dividend on both common and preferred stock of $0.70 per share to all stockholders of record on June 15.

June 30 Pay the cash dividends declared on June 1.

August 1 Purchase 250 shares of common treasury stock for $16 per share.

October 1 Reissue 150 shares of treasury stock purchased on August 1 for $18 per share.

Nautical has the following beginning balances in its stockholders’ equity accounts on January 1, 2018: Preferred Stock, $1,500; Common Stock, $1,600; Additional Paid-in Capital, $18,100; and Retained Earnings, $10,100. Net income for the year ended December 31, 2018, is $6,950.

Required:

1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Select whether each of the following transactions increases ( + ) or decreases ( - ) total assets, total liabilities, and total stockholders' equity. (If none of the categories apply for a particular item, leave the cell blank.)

Answer 1

1	Journal Entries
		Particulars				Amount($)
	Mar-01	Bank a/c	Dr	(1600*19)	30400
		To Common Stock		(1600*1)		1600
		To Securities Premium		(1600*18)		28800
	Apr-01	Bank a/c	Dr	(150*26)	3900
		To Preferred Stock		(150*10)		1500
		To Securities Premium		(150*16)		2400
	Jun-01	Retained Earnings a/c	Dr		2450
		To Dividend Payable for common Stock		(3200*0.70)		2240
		To Dividend Payable for Preferred Stock Stock		(300*0.70)		210
	Jun-30	Dividend Payable for common Stock a/c	Dr		2240
		Dividend Payable for Preferred Stock Stock a/c	Dr		210
		To Cash				2450
	Aug-01	Treasury Stock a/c	Dr	(250*16)	4000
		To Cash				4000
	Oct-01	Cash a/c	Dr	(150*18)	2700
		To Treasury Stock		(150*16)		2400
		To Paid in Capital from Treasury Stock		(150*2)		300
2		Assets
		Cash/bank
		Cash recived against issue of Stocks		37000
		(30400+3900+2700)
		Less:Dividend		2450
		Less:Treasury stock		4000
				30550
		Liabilities
		Stock Holders Equity
		Preferred Stock		1500
		Additions during the year		1500
		Common Stock		1600
		Additions during the year		1600
		Additional Paid In Capital		18100
		Additions during the year		300
		Retained Earnings		10100
		Additions during the year		6950
				41650
		Less:Treasury Stock		1600
				40050