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Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, and $1 par value...

Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2021, its first year of operations:

January 2 Issues 100,000 shares of common stock for $29 per share.
February 6 Issues 2,400 shares of 9% preferred stock for $11 per share.
September 10 Purchases 11,000 shares of its own common stock for $34 per share.
December 15 Resells 5,500 shares of treasury stock at $39 per share.


Required:
Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Solutions

Expert Solution

Solution:

Date Account Titles and Explanation Debit Credit
Jan. 2 Cash $ 2,900,000
Common Stock $     100,000
Paid in capital in excess of par value-Common stock $ 2,800,000
(To record Common Stock Issued)
Feb. 6 Cash $        26,400
Preferred Stock $        24,000
Paid in capital in excess of par value-Preferred stock $          2,400
( To record issue of preferred stock for cash)
Sept. 10 Treasury Stock $     374,000
Cash $     374,000
(To record Treasury Stock purchased)
Dec. 15 Cash $     214,500
Treasury Stock $     187,000
Add Paid-In Cap - Treasury Stock $        27,500
(To record treasury stock resold)

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