Question 1 Indigo Corporation has been authorized to issue 21,000 shares of $100

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Question 1 Indigo Corporation has been authorized to issue 21,000 shares of $100 par value, 990, noncumulative preferred stock and 1,200,000 shares of no-par common stock. The corporation assigned a $4 stated value to the common stock. At December 31, 2017, the ledger contained the following balances pertaining to stockholders' equity Preferred Stock Paid-in Capital in Excess of Par Value-Preferred Stock Common Stock Paid-in Capital in Excess of Stated Value Common Stock Treasury Stock (5,000 common shares) Retained Earnings Accumulated Other Comprehensive Income $160,000 22,000 2,010,000 1,610,000 45,000 81,700 50,000 The preferred stock was issued for $182,000 cash. All common stock issued was for cash. In November 5,000 shares of common stock were purchased for the treasury at a per share cost of $9. No dividends were declared in 2017

Explanation / Answer

Solution a:

Solution b:

Journal Entries - Indigo Corporation Event Particulars Debit Credit 1 Cash Dr $182,000.00          To Preferred Stock $160,000.00          To Paid in capital in excess of par - Preferred stock $22,000.00 (To record issue of preferred shares) 2 Cash Dr $3,620,000.00          To Common Stock $2,010,000.00          To Paid in capital in excess of stated value - common stock $1,610,000.00 (To record issue of preferred shares) 3 Treasury Stock Dr $45,000.00          To Cash $45,000.00 (To record purchase of own stock)

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