(a) Pringle Corporation has been authorized to issue 24,100 shares of $100 par v
ID: 2500230 • Letter: #
Question
(a)
Pringle Corporation has been authorized to issue 24,100 shares of $100 par value, 9%, noncumulative preferred stock and 1,092,700 shares of no-par common stock.The corporation assigned a $4 stated value to the common stock. At December 31, 2014, the ledger contained the following balances pertaining to stockholders’ equity.
Preferred Stock $144,800 Paid-in Capital in Excess of Par Value—Preferred Stock 22,420 Common Stock 2,110,000 Paid-in Capital in Excess of Stated Value—Common Stock 1,706,000 Treasury Stock— (3,460 common shares) 48,440 Retained Earnings 80,500
The preferred stock was issued for $167,220 cash. All common stock issued was for cash. In November 3,460 shares of common stock were purchased for the treasury at a per share cost of $14. No dividends were declared in 2014.
Explanation / Answer
Journal entries:
(1). Cash A/c Dr. $ 167,220
To Preferred Stock $100 par $ 144,800
To Paid-in capital in excess of par-preferred stock $ 22,420
[Being 1,448 shares of preferred stock issued.]
(2). Cash A/c Dr. $ 3,816,,000
To Common stock A/c Cr. 2,110,000 [ 527500 * 4]
To additional paid in capital A/c Cr. 1,706,000 [ 527500 * 3.23]
[ Being 527,500 shares of no par common stock issued in excess of stated price of $4.
(3). Common stock, $4 par value A/c Dr. $13,840 [3,460 * 4]
Additional paid in capital A/c Dr. $ 11,176 [3,460* 3.23]
Retained earnings A/c Dr. $ 23,424
To Cash A/c Cr. $ 48,440 [3,460* 14]
[ Being treasury stock issued @ $14 and recorded under constructive retirement method.]
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