Question

Provide the following journal entries:

1.  On Feb. 1 ABC Company issues 100,000 shares for common stock, $1 par, and 10,000 shares of preferred stock, 6%, $100 par.  The common stock is sold at $72/share.  The preferred stock is sold at $108 per share.

2.  On April 1 the ABC Company Board declares the regular preferred dividend.  The record date is April 15, the payment date is April 30.

3.  On May 1 we buy back 10,000 shares of common at $81/share.

4.  On June 15 we sell 1,000 shares of treasury stock at $85/share.

5.  On October 15 we sell 2,000 shares of treasury stock at $62/share.

6.  On Dec. 15 our stock is trading at $110/share. We declare a 2 for 1 stock split.

Answer 1

Date	Accounts Name	Debit	Credit
	Cash ( 100000 * 72 )	7200000
	Common Stock ( 100000 * 1 )		100000
	Additional paid in Capital ( 100000 * ( 72 – 1 )		7100000
	( to record the issue of Common Stock )
	Cash ( 100000 * 108 )	1080000
	preference Common Stock		1000000
	Additional paid in Capital preference Stock ( 10000 * ( 108-100 ) )		80000
	( to record the issue of preference dividend )
	Problem 2
	retained Earning	60000
	Dividends payable ( 1000000 * 6% )		60000
	( to record the dividend declared on apr 1st )
	on record date no journal entry required )
	Dividends payable	60000
	Cash		60000
	( to record the Dividends paid on Cash )
	Problem 3
	trasuty stock ( 10000 * 81 )	810000
	Cash		810000
	( to record the shares repurchased )
	Problem 4
	Cash ( 1000 * 85 )	85000
	Additional Paid in Capital - treasury Stock ( 1000 * ( 85 - 81) )		4000
	treasury Stock		81000

	Problem 5
	Cash ( 2000 * 62 )	124000
	Additional Paid in Capital - treasury Stock ( 2000 * ( 81 – 62) )	38000
	treasury Stock ( 2000 * 81 )		162000
	( to record the treasury Stock sold )

6) stock Split no journal entry required just memorandum Entry required

no of outstanding Shares = 100000 - 10000 + 1000 + 2000

= 93000 Shares

93000 Shares of $ 100 par value Are Converted into 186000 Shares of $ 50 par value