Question

National League Gear has two classes of stock authorized: 5%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2021, National League’s first year of operations:

February 2 Issue 1.3 million shares of common stock for $33 per share.

February 4 Issue 580,000 shares of preferred stock for $24 per share.

June 15 Purchase 130,000 shares of its own common stock for $28 per share.

August 15 Resell 97,500 shares of treasury stock for $43 per share.

November 1 Declare a cash dividend on its common stock of $1.30 per share and a $580,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.)

November 30 Pay the dividends declared on November 1.

1. 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.

No	Date	General Journal	Debit	Credit
1	February 02, 2021
2	February 04, 2021
3	June 15, 2021
4	August 15, 2021
5	November 01, 2021
6	November 15, 2021	No Journal Entry Required
7	November 30, 2021

Answer 1

	Date	General Journal	Debit	Credit
1	February 02, 2021	Cash	42900000		=1300000*33
		Common stock		6500000	=1300000*5
		Additional Paid in Capital		36400000
2	February 04, 2021	Cash	13920000		=580000*24
		Preferred stock		11600000	=580000*20
		Additional Paid in Capital		2320000
3	June 15, 2021	Treasury stock	3640000		=130000*28
		Cash		3640000
4	August 15, 2021	Cash	4192500		=97500*43
		Treasury stock		2730000	=97500*28
		Additional Paid in Capital		1462500
5	November 01, 2021	Dividends / Retained Earnings	2227750		=(1300000-130000+97500)*1.30+580000
		Dividends payable		2227750
6	November 15, 2021	No Journal Entry Required
7	November 30, 2021	Dividends payable	2227750
		Cash		2227750