Question

Question 1: Western Wear Clothing issues 1,500 shares of its $0.01 par value common stock to provide funds for further expansion. Assuming the issue price is $12 per share, record the issuance of common stock. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question 2: Rachel's Designs has 1,100 shares of 7%, $50 par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The company plans to pay total dividends of $13,000 in 2021. How much of the $13,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders?

Question 3: California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $29 per share. Later in the year, the company decides to purchase 100 shares at a cost of $32 per share.

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

Question 5: Divine Apparel has 3,700 shares of common stock outstanding. On October 1, the company declares a $0.75 per share dividend to stockholders of record on October 15. The dividend is paid on October 31.

Record all transactions on the appropriate dates for cash dividends. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question 6: On June 30, the board of directors of Sandals, Inc., declares and pays a 100% stock dividend on its 12,000, $1 par, common shares. The market price of Sandals common stock is $17 on June 30.
Record the stock dividend. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question 7:

Italian Stallion has the following transactions during the year related to stockholders’ equity.

February		1		Issues 5,700 shares of no-par common stock for $16 per share.
May		15		Issues 400 shares of $10 par value, 11% preferred stock for $13 per share.
October		1		Declares a cash dividend of $1.10 per share to all stockholders of record (both common and preferred) on October 15.
October		15		Date of record.
October		31		Pays the cash dividend declared on October 1.

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.)

Question 8:

Finishing Touches has two classes of stock authorized: 7%, $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 $30 per share.
February		6		Issues 2,500 shares of 7% preferred stock for $13 per share.
September		10		Purchases 12,000 shares of its own common stock for $35 per share.
December		15		Resells 6,000 shares of treasury stock at $40 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.)

Question 9:

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March		1		Issues 51,000 additional shares of $1 par value common stock for $48 per share.
May		10		Purchases 4,600 shares of treasury stock for $51 per share.
June		1		Declares a cash dividend of $1.30 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July		1		Pays the cash dividend declared on June 1.
October		21		Resells 2,300 shares of treasury stock purchased on May 10 for $56 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.)

Question 10:

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March		1		Issues 45,000 additional shares of $1 par value common stock for $42 per share.
May		10		Purchases 4,000 shares of treasury stock for $45 per share.
June		1		Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July		1		Pays the cash dividend declared on June 1.
October		21		Resells 2,000 shares of treasury stock purchased on May 10 for $50 per share.

Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-in Capital, $3,500,000; and Retained Earnings, $1,000,000. Net income for the year ended December 31, 2021, is $500,000.

Required:
Prepare the statement of stockholders' equity for Power Drive Corporation for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Question 16:

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 300 shares of preferred stock and 3,400 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March		1		Issue 1,100 shares of common stock for $36 per share.
May		15		Purchase 400 shares of treasury stock for $29 per share.
July		10		Resell 200 shares of treasury stock purchased on May 15 for $34 per share.
October		15		Issue 200 shares of preferred stock for $39 per share.
December		1		Declare a cash dividend on both common and preferred stock of $0.95 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)
December		31		Pay the cash dividends declared on December 1.

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Preferred Stock, $300; Common Stock, $34; Additional Paid-in Capital, $70,000; and Retained Earnings, $27,500. Net income for the year ended December 31, 2021, is $10,200.

Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021, respond to the following for Donnie Hilfiger:

Required:

1. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Question 17:

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 300 shares of preferred stock and 3,400 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

March		1		Issue 1,100 shares of common stock for $36 per share.
May		15		Purchase 400 shares of treasury stock for $29 per share.
July		10		Resell 200 shares of treasury stock purchased on May 15 for $34 per share.
October		15		Issue 200 shares of preferred stock for $39 per share.
December		1		Declare a cash dividend on both common and preferred stock of $0.95 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)
December		31		Pay the cash dividends declared on December 1.

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Preferred Stock, $300; Common Stock, $34; Additional Paid-in Capital, $70,000; and Retained Earnings, $27,500. Net income for the year ended December 31, 2021, is $10,200.

Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021, respond to the following for Donnie Hilfiger:

2. Prepare the statement of stockholders’ equity for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

1	Particulars						Debit	Credit
	Cash				(1500*12)		18000
	Common stock				(1500*0.01)			15
	Paid-in capital in excess of par-Common stock					(Plug)		17985
	(Common stock issued)
2	Dividend paid to preferred stockholders:
					$
	Dividend for 2019		(1100*50*7%)		3850
	Dividend for 2020		(1100*50*7%)		3850
	Dividend for 2021		(1100*50*7%)		3850
	Total				11550
	Dividend paid to common stockholders=Total dividend-Dividend paid to preferred stockholders=13000-11550=$ 1450
3	Particulars				Debit	Credit
	Treasury stock		(100*32)		3200
	Cash					3200
	(Purchase of treasury stock)
5	Journal entries:
	Date	Particulars					Debit	Credit
	Oct 1.	Dividends			(3700*0.75)		2775
		Dividend payable						2775
		(Dividend declared)
	Oct 15.	No Journal Entry Required
	Oct 31.	Dividend payable					2775
		Cash						2775
		(Dividend paid)