Question

Sheridan Company reported the following amounts in the stockholders’ equity section of its December 31, 2019, balance sheet.

Preferred stock, 9%, $100 par (10,000 shares authorized, 1,900 shares issued)		$190,000
Common stock, $5 par (98,000 shares authorized, 19,600 shares issued)		98,000
Additional paid-in capital		117,000
Retained earnings		470,000
Total		$875,000

During 2020, Sheridan took part in the following transactions concerning stockholders’ equity.

1.		Paid the annual 2019 $9 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2019.
2.		Purchased 1,700 shares of its own outstanding common stock for $37 per share. Sheridan uses the cost method.
3.		Reissued 700 treasury shares for land valued at $29,500.
4.		Issued 450 shares of preferred stock at $104 per share.
5.		Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $47 per share.
6.		Issued the stock dividend.
7.		Declared the annual 2020 $9 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2021.

Prepare journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the December 31, 2020, stockholders’ equity section. Assume 2020 net income was $341,000. (Enter account name only .Do not provide any descriptive information.)

Answer 1

a.)	S. No.	Account Tiles	Debit $	Credit $
	1	Dividend Payable-Preferred ( 1,900 x 9 )	17,100
		Dividend Payable- Common ( 19,600 x 2 )	39,200
		Cash		56,300
	2	Treasury Stock	62,900
		Cash ( 1,700 x 37 )		62,900
	3	Land	29,500
		Treasury Stock ( 700 x 37 )		25,900
		Additional paid in capital		3,600
	4	Cash ( 450 x 104 )	46,800
		Preferred Stock ( 450 x 100)		45,000
		Additional paid in capital		1,800
	5	Retained earnings (19,600 -1700 + 700 ) x 10% x 47	87,420
		Common Stock Dividend Distributable		9,300
		( 19,600 -1,700 + 700 ) x 10% x 5
		Additional paid in capital		78,120
	6	Common Stock Dividend Distributable	9,300
		Common Stock		9,300
	7	Retained earnings	62,070
		Dividend Payable-Preferred ( 1,900 + 450 ) x 9		21,150
		Dividend Payable- Common ( 19,600 - 1,700 + 700 +1,860 ) x 2		40,920

b.)		Amount $
	Capital Stock
	Preferred stock, 9%, $100 par ( 190,000 + 45,000 )	235,000
	Common stock, $5 par ( 98,000 + 9,300 )	107,300
	Total Capital Stock	342,300
	Additional paid in capital (117,000 + 3,600 + 1,800 + 78,120 )	200,520
	Retained earnings (470,000 - 87,420 -62,070 + 341,000 )	661,510
	Total paid in capital	12,04,330
	Less: Treasury Stock ( 62,900 - 25,900 )	37,000
	Total Stockholder's Equity	1,167,330