Question

On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here.

Common Stock		$6,825,000
Additional Paid-in Capital		1,845,000
Retained Earnings		1,105,000

Transactions during 2022 and other information related to stockholders’ equity accounts were as follows.

1.		On January 10, issued at $114 per share 112,000 shares of $101 par value, 7% cumulative preferred stock.
2.		On February 8, reacquired 13,900 shares of its common stock for $15 per share.
3.		On May 9, declared the yearly cash dividend on preferred stock, payable June 10, to stockholders of record on May 31.
4.		On June 8, declared a cash dividend of $1.75 per share on the common stock outstanding, payable on July 10, to stockholders of record on July 1.
5.		Net income for 2022 was $3,606,000.

A.) Record the journal entries that are required for items 1–5 above. (Record entries in the order displayed in the problem statement. 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.)

B.) Prepare the stockholders’ equity section of Orioles' balance sheet at December 31, 2022.

Answer 1

A)

	1) Journal Entries
	Date	Account Titles and Explanation	Debit	Credit
1)	Jan. 10	Cash (112,000 * $114)	$12,768,000
		Preferred Stock (112,000 * $101)		$11,312,000
		Paid-in capital in excess of par vale - Preferred Stock ($114 - $101 = $13 * 112,000)		$1,456,000
		(To record the issue of 7% preferred stock)
2)	Feb. 8	Treasury Stock (13,900*$15)	$208,500
		Cash		$208,500
		(To record the purchase of own shares)
3_	May. 9	Preferred Dividends ($11,312,000*7/100)	$791,840
		Dividends Payable		$791,840
		(To record the declaration of preferred dividends)
	May. 10	Dividends Payable	$791,840
		Cash		$791,840
		(To record the payment of preferred dividends)
4)	Jun. 8	Dividends (1,365,000 - 13,900 = 1,351,100*$1.75)	$2,364,425
		Dividends Payable		$2,364,425
		(To record the declaration of dividends on common stock)
	Jul. 10	Dividends Payable	$2,364,425
		Cash		$2,364,425
		(To record the payment of common dividends)

B)

B) Stockholders' Equity Section:
Orioles Company
Stockholders' Equity Section
December 31, 2021.
Common Stock (1,351,100 shares * $5 Par value)	$6,755,500
Preferred Stock (112,000 shares @ $101 par value)	$11,312,000
Total paid-in capital	$18,067,500
Additional Paid-in Capital	$1,845,000
Paid-in capital in excess of par vale - Preferred Stock	$1,456,000
Total Contributed Capital	$21,368,500
Less: Treasury Stock	($208,500)
Add: Retained earnings ($1,105,000 + $3,606,000 - $791,840 - $2,364,425)	$1,554,735
Total Shareholder's Equity	$22,714,735