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.


During 2014, Cleves took part in the following transactions concerning stockholders’ equity.


(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 $343,500. (Enter account name only .Do not provide any descriptive information.)

No.

Account Titles and Explanation

Debit

Credit

ANNE CLEVES COMPANY
Stockholders’ Equity
December 31, 2014

$

Preferred stock, 11%, $100 par (10,000 shares authorized, 2,470 shares issued) $247,000 Common stock, $5 par (126,500 shares authorized, 25,300 shares issued) 126,500 Additional paid-in capital 132,800 Retained earnings 459,600    Total $965,900 1. Paid the annual 2013 $11 per share dividend on preferred stock and a $4 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 $39 per share. Cleves uses the cost method. 3. Reissued 670 treasury shares for land valued at $34,320. 4. Issued 520 shares of preferred stock at $105 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 $11 per share dividend on preferred stock and the $4 per share dividend on common stock. These dividends are payable in 2015.

No.

Account Titles and Explanation

Debit

Credit

1.

2.

3.

4.

5.

6.

7.

ANNE CLEVES COMPANY
Stockholders’ Equity
December 31, 2014

$

:

$

Explanation / Answer

a)

Journal entries:

b)

Stockholders' section:

Date Accounts and explanations Debit ($) Credit ($) 2014 Dividends payable - Commo stock ($4 per share * 25,300 shares) 101,200 Dividends payable - Preferred stock ($11 per share * 2,470 shares) 27,170    Cash 128,370 (To record the payment of dividends on common and preferred stocks by cash) 2014 Treasury stock (1,600 shares * $39 per share) 62,400    Cash 62,400 (To record the purchase of own shares at $36 each)

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