Question

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.)

Answer 1

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)