Anne Cleves Company reported the following amounts in the stockholders’ equity s

Question

Anne Cleves Company reported the following amounts in the stockholders’ equity section of its December 31, 2013, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 2,450 shares issued) $245,000 Common stock, $5 par (122,750 shares authorized, 24,550 shares issued) 122,750 Additional paid-in capital 132,900 Retained earnings 455,500 Total $956,150 During 2014, Cleves took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2013 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2013. 2. Purchased 1,600 shares of its own outstanding common stock for $38 per share. Cleves uses the cost method. 3. Reissued 660 treasury shares for land valued at $31,640. 4. Issued 510 shares of preferred stock at $107 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share. 6. Issued the stock dividend. 7. Declared the annual 2014 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2015.

(a) Prepare journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(b) Prepare the December 31, 2014, stockholders’ equity section. Assume 2014 net income was $350,000. (Enter account name only .Do not provide any descriptive information.)

Explanation / Answer

1.

Dividends Payable—Preferred ......................

Dividends Payable—Common ......................

          Cash.............................................................................

Treasury Stock......................................................................

          Cash ......................................................

Land......................................................................................          

          Treasury Stock ()........................................

          Paid-in Capital From Treasury Stock........................

Cash ................................................................

          Preferred Stock ...................................

          Paid-in Capital in Excess of Par—

             Preferred...................................................................

Retained Earnings ......................................

          Common Stock Dividend Distributable

..............................................................

          Paid-in Capital in Excess of Par—

             Common...................................................................

Common Stock Dividend Distributable...............................

          Common Stock............................................................

Retained Earnings................................................................

          Dividends Payable—Preferred

          Dividends Payable—Common

  

1.

Dividends Payable—Preferred ......................

Dividends Payable—Common ......................

          Cash.............................................................................

Treasury Stock......................................................................

          Cash ......................................................

Land......................................................................................          

          Treasury Stock ()........................................

          Paid-in Capital From Treasury Stock........................

Cash ................................................................

          Preferred Stock ...................................

          Paid-in Capital in Excess of Par—

             Preferred...................................................................

Retained Earnings ......................................

          Common Stock Dividend Distributable

..............................................................

          Paid-in Capital in Excess of Par—

             Common...................................................................

Common Stock Dividend Distributable...............................

          Common Stock............................................................

Retained Earnings................................................................

          Dividends Payable—Preferred

          Dividends Payable—Common

  

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