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The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...

The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 25,000 shares $2,500,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 416,000 shares 2,080,000 Paid-in capital in excess of par—preferred 81,000 Paid-in capital in excess of par—common 806,000 Retained earnings 3,120,000 $8,587,000 The following events occurred during 2016: Jan. 5 8,500 shares of authorized and unissued common stock were sold for $6 per share. 16 9,500 shares of authorized and unissued preferred stock were sold for $109 per share. Apr. 1 78,000 shares of common stock were repurchased for the treasury at a price of $19 per share. Superior uses the cost method to account for treasury stock. Sept. 1 3,500 shares of preferred stock are issued in exchange for a piece of land. The land has an appraised value of $375,500. The preferred stock currently trades on the New York Stock Exchange at a price of $105 per share. Dec. 1 26,000 shares of treasury stock are reissued at a price of $28 per share. Required: 1. Prepare journal entries for each of the above transactions. 2. Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2016. 3. Calculate Superior’s legal capital at December 31, 2016.Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2016. Authorized common shares shares Issued shares Outstanding shares Calculate Superior’s legal capital at December 31, 2016. Total legal capital $

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Expert Solution

1 Date Account tiltes and explanation Debit Credit
Jan 5. Cash (8500*6) 51000
Common stock (8500*5) 42500
Paid-in capital in excess of par—common 8500
(Sold common stock)
Jan 16. Cash (9500*109) 1035500
Preferred stock (9500*100) 950000
Paid-in capital in excess of par—preferred 85500
(Sold preferred stock)
Apr 1. Treasury stock (78000*19) 1482000
Cash 1482000
(Treasury stock purchased)
Sept 1. Land 375500
Preferred stock (3500*100) 350000
Paid-in capital in excess of par—preferred 25500
(Preferred stock issued in exchange of land)
Dec 1. Cash (26000*28) 728000
Treasury stock (26000*19) 494000
paid-in capital from treasury stock 234000
(Treasury stock reissued)
2 Common shares:
Authorized 2000000 shares of $5 parvalue 10000000
Issued 424500 shares of $5 par value 2122500
(416000+8500)
Outstanding 372500 shares of $5 par value 1862500
(424500-78000+26000)
3 Legal capital:
Par value of common stock and preferred stock
Common stock 424500 shares of $5 par value 2122500
Preferred stock 38000 shares of $100 par value 3800000
(25000+9500+3500)

ekkarill92 answered 2 years ago
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