Question

All Things Archery Corporation was incorporated on January 1 for the purpose of becoming the premier distributor of all things archery. The corporate charter authorized the following stock:

Common stock, $1 par value; 10,000 shares Preferred stock, 5% noncumulative, $50 par value; 1,000 shares The following transactions occurred during the year:

A. Janurary 1- issued a total of 4,000 shares of $1 par value common stock for cash at $10 per share.

B. February 1- issued 500 shares of preferred stock for cash at $75 per share.

C. July 1- purchased 200 shares of common stock that had been issued earlier. All things archery corporation paid the stockholder $12 per share for the stock, to be held in the treasury

D. September 1: issued 50 shares of the common treasury stock at $12 per share

E. December 1 - the board of directors declared a cash dividend on the preferred stock, payable on december 22, to stockholder of records as of december 1

f. December 22 paid the cash dividends declared on December 1.

Record these transactions in the general journal and prepare the stockholders’ equity section of the balance sheet for All Things Archery Corporation as of December 31. Assume the balance in the Retained Earnings after closing entries is $31,500.

Answer 1

Journal entry

Date	account and explanation	debit	credit
Jan 1	Cash	40000
	Common Stock		4000
	Paid in capital in excess of par value-Common Stock		36000
	(To record issue common Stock)
Feb 1	Cash (500*75)	37500
	Preferred Stock		25000
	paid in capital in excess of par value-preferred stock		12500
	(To record preferred stock)
July 1	Treasury Stock (200*12)	2400
	Cash		2400
	(To record tresury Stock purchased)
Sep 1	Cash (50*12)	600
	Treasury Stock		600
	(To record reissued)
dec 1	Cash dividend (500*50)*5%	1250
	Preferred dividend payable		1250
	(To record dividend declared)
Dec 22	Preferred dividend payable	1250
	Cash		1250
	(To record dividend paid)

Stockholder's equity

Paid in capital
Common Stock	4000
Paid in capital in excess of par value-Common Stock	36000	40000
Preferred stock	25000
Paid in capital in excess of par value-Preferred stock	12500	37500
Total paid in capital		77500
Retained earnings		31500
Total		109000
Less; Treasury Stock (150*12)		-1800
Total Stockholder's equity		107200