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Question 1. A company has the following transactions during the year related to stockholders’ equity. February...

Question 1. A company has the following transactions during the year related to stockholders’ equity.

February 1 Issues 4,800 shares of no-par common stock for $15 per share.
May 15 Issues 300 shares of $10 par value, 6.5% preferred stock for $12 per share.
October 1 Declares a cash dividend of $0.65 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 2.

A company has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during Year 1, its first year of operations:

January 2 Issues 100,000 shares of common stock for $34 per share.
February 6 Issues 2,900 shares of 8% preferred stock for $12 per share.
September 10 Purchases 10,000 shares of its own common stock for $39 per share.
December 15 Resells 5,000 shares of treasury stock at $44 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

Question-1

Date Particulars Amount Dr.($) Amount Cr.($)
1-Feb Bank              A/c                                                Dr. 72000
                  To Share Capital A/c 72000
(Being Common Share Issued )
15-May Bank              A/c                                                 Dr. 3600
                  To 6.5% Preference Share Capital A/c 3000
                  To Security Premium A/c 600
(Being Preffered Stock Issued on Premium)
1-Oct No Journal Entry Required
15-Oct Dividend              A/c                                          Dr. 3315
                      To Dividend Payable A/c 3315
(Being Dividend declared amount recorded)
31-Oct Dividend Payable   A/c                                        Dr. 3315
                        To Bank A/c 3315
(Being Dividend Amount Paid)

ekkarill92 answered 1 year ago
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