Question

1. On January 1, 2017, Ostrander Corporation was authorized to issue 150,000 shares of common stock, par value $7 per share, and 40,000 shares of 5 percent cumulative preferred stock, par value $50 per share.

Prepare journal entries to record the following 2017 transactions for Ostrander Corporation:

1.	Issued 60,000 shares of common stock at $12 per share.
2.	Issued 12,000 shares of preferred stock at $56 per share.
3.	Reacquired 2,000 shares of common stock at $12 per share.
4.	Reissued 400 of the treasury shares for $5,200.
5.	Reissued 600 of the treasury shares for $6,000
6.	Declared a cash dividend sufficient to meet the current dividend preference for preferred shareholders and also pay common shareholders $1.00 per share.

Answer 1

Solution:

Journal Entries - Ostrander Corporation
Event	Particulars	Debit	Credit
1	Cash Dr	$720,000.00
	To Common stock		$420,000.00
	To Paid up capital in excess of par - common stock		$300,000.00
	(To record issue of common stock)
2	Cash Dr	$672,000.00
	To Preferred stock		$600,000.00
	To Paid up capital in excess of par - Preferred stock		$72,000.00
	(To record issue of 5% preferred stock)
3	Treasury Stock Dr	$24,000.00
	To Cash		$24,000.00
	(To record purchase of treasury stock)
4	Cash Dr	$5,200.00
	To Treasury Stock		$4,800.00
	To Additional paid in capital		$400.00
	(Being 400 share of treasury stock sold at $13 per share)
5	Cash Dr	$6,000.00
	Additional paid in capital Dr	$400.00
	Retained earnings Dr	$800.00
	To Treasury Stock		$7,200.00
	(Being 600 share of treasury stock sold at $10 per share)
6	Retained earnings Dr ($600,000*5% + 59000*$1)	$89,000.00
	To Dividend payable		$89,000.00
	(Being dividend declared on common stock and preferred stock)