National League Gear has two classes of stock authorized: 5%, $20 par preferred,

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 2015, National League’s first year of operations: February 2 Issue 1.1 million shares of common stock for $24 per share. February 4 Issue 490,000 shares of preferred stock for $24 per share. June 15 Repurchase 110,000 shares of its own common stock for $19 per share. August 15 Reissue 82,500 shares of treasury stock for $34 per share. November 1 Declare a cash dividend on its common stock of $1.10 per share and a $490,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Hint: Dividends are not paid on treasury stock.) November 30 Pay the dividends declared on November 1. Issue 1.10 million shares of common stock for $24 per share. Record the transaction. Issue 490,000 shares of preferred stock for $24 per share. Record the transaction. Repurchase 110,000 shares of its own common stock for $19 per share. Record the transaction. Reissue 82,500 shares of treasury stock for $34 per share. Record the transaction. Declare a cash dividend on its common stock of $1.10 per share and a $490,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Hint: Dividends are not paid on treasury stock.) Record the declaration of cash dividends. Declare a cash dividend on its common stock of $1.10 per share and a $490,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Hint: Dividends are not paid on treasury stock.). Record the entry on the date of record. Issue 1.10 million shares of common stock for $24 per share. Record the transaction. Issue 490,000 shares of preferred stock for $24 per share. Record the transaction. Repurchase 110,000 shares of its own common stock for $19 per share. Record the transaction. Reissue 82,500 shares of treasury stock for $34 per share. Record the transaction. Declare a cash dividend on its common stock of $1.10 per share and a $490,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Hint: Dividends are not paid on treasury stock.) Record the declaration of cash dividends. Declare a cash dividend on its common stock of $1.10 per share and a $490,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Hint: Dividends are not paid on treasury stock.). Record the entry on the date of record. Pay the dividends declared on November 1. Record the transaction.

Explanation / Answer

Date Acconts Title Dr Cr 2-Feb Cash $26400000 Common Stock(1100000*5) 5500000 Paid In Capital in excess of par value- Common stock(1100000*19) 20900000 4-Feb Cash 11760000 Preferred Stock(490000*20) 9800000 Paid In Capital in excess of par value Preferred stock(490000*4) 1960000 15-Jun Treasury stock (110000*19) 2090000 Cash 2090000 15-Aug Cash 2805000 Treasury stock 82500*19 1567500 Paid In Capital in excess of par value Trasuary stock(82500*(34-19)) 1237500 1-Nov Retained earnings 1700000 Dividend on common stock payable (1100000*1.1) 1210000 Dividend on Preferredstock payable 490000 15-Nov Memorandum entry in the records 30-Nov Dividend on common stock payable (1100000*1.1) 1210000 Dividend on Preferredstock payable 490000 cash 1700000

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