Hawkins has two classes of shares: 1) 5% preferred with $10 par value, and 2) co

Question

Hawkins has two classes of shares: 1) 5% preferred with $10 par value, and 2) common stock with $1 par value.

Mrs. Wheeler was able to to recall the following transactions that occured during 2017:

1/1/17: Issues 400,000 shares of common stock at $31 per share. The underwriter charged a 3% fee for issuing the shares.

1/1/17: Issued 500,000 shares of its preferred sotck at $40 per share. The shares were privately placed and Hawkins did not pay share issue costs.

3/1/17: Purchased 200,000 shares of common stock at $35 per share.

6/30/17: Decalred a $450,000 dividend for the first half of the year.

7/1/17: Sold 105,000 of the treasury shares at $44 per share ( the company uses the FIFO method when determining par value of sold treasury shares)

9/1/17: Declared a distributed property dividend of shares of stock in Byers Corp Hawkins' purchased 3,570,000 shares of Byers Corp in 2016 for 28,560,000. On 9/1/17, shares of Byers Corp were trading at $1/50 per share.

12/31/17: Hawkins' reported a net income of $5,325,691 (which includes the effects of the transactions listed above.

REQUIREMENT: Prepare Jounral entries for the above transactions.

Explanation / Answer

01/01/2017 Cash A/c 12400000 (400000*31) to Common Stock 400000 (400000*1) to Addition paid in capital 12000000 (400000*30) 01/01/2017 Underwriting Expenses 372000 to Cash 372000 01/01/2017 Cash A/c 20000000 (500000*40) to 5% Preference shares 5000000 (500000*10) to Additional Paid in capital (Prefernce capital) 15000000 (500000*30) 01/03/2017 Treasury Stock 7000000 (200000*35) to Cash 7000000 (200000*35) 30/06/2017 Dividend A/c 450000 to Dividend Payable 450000 01/07/2017 Cash A/c 4620000 (105000*44) to Addition in paid up capital (Treasury Stock) 945000 (105000*9) to Treasury Stock 3675000 (105000*35) 01/09/2017 31/12/2017 Income Statement 5325691 to Retained earning 5325691

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