Question

Please provide explanations and calculations.

Top Tech, Inc. Stockholders' Equity Section at the end of last year was as follows:

Paid In capital:
Preferred Stock, 150,000 Shs. Authorized, 80,000 Outstanding, $20 Par, 6% divdend rate 1,600,000

Common Stock, 70,000 Shs. Issued and Outstanding, $10 Par 700,000

Total Paid in Capital 2,300,000
Retained Earnings 324,500
Total Stockholders' Equity 2,624,500

Req. #1, give general journal entries for the following transactions that took place this year:

1 Sold 5,000 shares of Pfd. Stock for $22/Sh.
2 Bought back 5,000 shs of the common stock that were outstanding. Paid $17/Share
3 Sold 3,000 of the shares bought back in prior transaction. Received $12/Share
4 Give 3rd closing entry with the corp. earning 38,000 for the year.

Req. #2 prepare Top Tech, Inc. Stockholders' Equity Section at the end of this year.

Req. #3 calculate common stock book value per share at the end of last year and at the end of this year.

Answer 1

Trans	Accounts Title	Dr	Cr
1	Cash (5000*22)	110000
	Preferred Stock (5000*20)		100000
	Paid in capital in excess of par-preferred		10000
	(being preferred stock issued)
2	Treasury Stock	85000
	Cash (5000*17)		85000
	(being treasury stock purchased)
3	Cash (3000*12)	36000
	Retained Eranings (3000*5)	15000
	Treasury Stock		51000
4	Income Summary	$38,000
	Retained Earnings		$38,000
ans 2	Stock holder Equity section
	Paid In capital:
	Preferred Stock, 150,000 Shs. Authorized, 80,000 Outstanding, $20 Par, 6% divdend rate (1,600,000 +100000+10000)	1710000
	Common Stock, 70,000 Shs. Issued and Outstanding, $10 Par 700,000	700000
	Total Paid in Capital	2410000
	Retained Earnings (324,500-15000+38000)	347500
	Less: Treasury stock (2000*17)	-34000
	Total stockholder Equity	2723500
ans 3	Book value	This Year	Last year
	Stockholder equity/no. of common stock	$3.90	$3.75
		2723500/698000	2624500/700000